The government has consistently emphasised increasing agricultural production, promoting mechanisation and expanding the use of environmentally friendly green energy. However, the proposed budget guidelines for fiscal year 2026-27 present a contrasting picture.
The budget has increased duties and VAT on saplings used by farmers, agricultural machinery components and biogas equipment, raising concerns over added financial pressure on both agriculture and green energy initiatives.
Analysts say the mismatch between policy objectives and the tax structure could create significant barriers for the agriculture sector and environmentally sustainable development.
A review of the budget guidelines shows that several essential items directly linked to farming operations and environmental protection now face higher tax burdens.
Sharp rise in duties on saplings and nursery products
Saplings and grafts play a vital role in agricultural expansion and afforestation activities. Under the new budget proposal, import duty on unrooted cuttings and grafts has been raised sharply from 5 per cent to 15 per cent.
At the same time, import duty on different types of plants and saplings, including roses and rhododendrons, has also increased from 5 per cent to 15 per cent.
This rise in duties is expected to increase costs for nursery owners, farmers and gardening enthusiasts, affecting both commercial cultivation and small-scale planting activities.
New VAT imposed on tractor tyres in mechanisation push
The government has long promoted agricultural mechanisation to address labour shortages and increase productivity in farming. However, the budget introduces a new 15 per cent value-added tax on tractor tyres, which previously carried zero VAT.
Farmers rely heavily on tractors for land preparation. Industry observers warn that the new VAT on tyres will raise cultivation costs, ultimately increasing the overall cost of crop production.
Biogas equipment faces steep duty increase
Biogas plants have become a widely used source of alternative and environmentally friendly energy in rural areas. Produced from livestock waste, biogas plays an important role in renewable energy generation and environmental protection.
Under the proposed budget, import duty on biogas digesters has been increased sharply from 1 per cent to 10 per cent.
Renewable energy entrepreneurs say the steep increase will create a major obstacle to the expansion of biogas projects and slow down the adoption of clean energy solutions.
Stakeholders argue that while the government continues to stress agricultural incentives and environmental protection, the increased costs of essential inputs contradict these policy goals.
They have called for the withdrawal of the proposed duty and VAT increases before the final budget approval, taking into account the interests of farmers and environmental sustainability.
