Lower GST on insecticides can boost access, cut disease risk: EY-HICA

Reducing GST on household insecticides to 5% can improve affordability, widen rural access, and help curb mosquito-borne diseases, says a joint EY India-HICA report

Reducing GST on household insecticides from 18 per cent to 5 per cent can significantly improve affordability and access, especially in rural areas, and help curb mosquito-borne diseases such as malaria, dengue, and chikungunya, according to a joint report by EY India and the Home Insect Control Association (HICA).

 

The report, titled “GST rationalisation for household insecticides: A public health imperative”, says products like liquid vapourisers, coils, and aerosols act as the first line of defence at the household level, where large-scale government interventions often face practical and behavioural limitations.

 

Despite their preventive health role, these products continue to attract 18 per cent GST, even as several essential health and hygiene items were moved to lower tax slabs of 5 per cent or nil after September 2025.

 

 

The report highlights a sharp urban-rural divide in usage. While penetration in urban areas is as high as 92–99 per cent, rural adoption lags at 64–73 per cent, largely due to affordability constraints. This gap leaves low-income and rural households—often more vulnerable to vector-borne diseases—less protected.

 

It also flags concerns around unregulated and substandard products, which are sometimes misclassified under lower GST slabs. This creates a price advantage over compliant manufacturers, leading to market distortions, consumer safety risks, and revenue leakage for the government.

 

The report recommends reducing GST to 5 per cent and introducing a clear classification for household insecticides under the GST framework. These measures, it says, can improve access, discourage unsafe alternatives, and promote formalisation of the sector.

 

Jayant Deshpande, secretary and director at HICA, said lower taxes would make essential insecticide products more affordable while also helping organised players compete with illegal manufacturers. Higher consumption following a tax cut could also support government revenues, he added.

 

Bipin Sapra, tax partner at EY India, noted that while a lower GST rate could lead to some input tax credit accumulation due to an inverted duty structure, the broader public health benefits outweigh the operational challenges.

 

The report also highlights a sharp consumption divide, with average monthly spending on household insecticides at around ₹62 in urban areas compared to just ₹8 in rural regions, underscoring affordability constraints. India’s household insecticide market has grown from ₹7,147 crore in 2023 to ₹8,138 crore in 2025, but rural markets continue to account for only about 30 per cent of sales.

 

It further flags the rise of substandard products, often misclassified under lower GST slabs such as agarbattis, creating tax arbitrage, safety risks, and revenue leakage. Nearly 69 per cent of consumers surveyed expressed concern over the availability of such unregulated products.