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Fertiliser min to seek fund to clear Rs 23K cr subsidy arrears

Press Trust of India  |  New Delhi 

Fertiliser subsidy arrears have nearly halved to Rs 23,000 crore in the last three years, Union Minister Ananth Kumar said today, assuring the industry that funds would be sought from the ministry to clear all the dues.

The direct benefit transfer (DBT) for fertiliser subsidy, which is being implemented in some states, will be rolled out across the country from April 1, he said.


"I am happy to note that backlog of subsidy which was Rs 44,000 crore (in 2014) has been reduced to Rs 23,000 crore. Now, I am going to request to the minister to clear this arrear in one go. Once for all, finish this backlog," the chemicals and fertilisers minister said.

He was addressing a conference of industry body, Fertiliser Association of (FAI).

Kumar said he is going to impress upon the minister to clear this long pending dues to the industry. "We want to create clean slate."

The payment of subsidy arrears would boost the industry's flow and working capital as well as result in huge saving of interest cost, Kumar said.

"I want fertiliser industry to be viable and buoyant so that it can serve farmers in a better way," he said.

On losses being incurred by urea plants, he said the government is seriously considering revision of fixed cost of urea and giving amnesty to meet the energy norm.

The government has not revised the fixed cost of urea for last 15 years due to which the companies have been incurring losses. The last revision was done way back in 2002.

Also, urea plants have to meet the energy norms from April onwards and as a result some plants are shut to undertake energy efficiency exercise. This has been affecting the urea production.

On industry's demand to reduce GST on fertiliser raw materials, the minister assured that he will take up the matter with the ministry.

"We will request for reduction of GST on ammonia and phosphoric acid from 18 per cent. We will take up this matter," he said.

The Goods and Services Tax (GST) on fertiliser is kept at 5 per cent for both domestic and imported one, while its raw materials are taxed at 18 per cent.

In the last GST Council meeting, the GST on one of the fertiliser raw materials Sulphur was reduced to 5 per cent from 18 per cent. The fertiliser industry has demanded the same reduction of tax on ammonia and phosphoric acid.

produces 24 million tonnes of urea and imports 6-7 MT to meet the gap. Urea is highly subsided at Rs 5,360 per tonne, while its production cost is Rs 16,000 per tonne. The difference is paid to manufacturers as subsidy. Non-urea fertilisers like potash are largely imported.

Kumar said the government is reviving the closed urea plant. With an investment of about Rs 40,000 crore, which will boost the capacity by 9.2 MT and make the country self sufficient in the next five years.

The minister highlighted the initiatives taken by his ministry in the last three and half years including 100 per cent neem coating of urea and new urea policy, freight policy, and gas pooling.

"There is a huge transformation in the fertiliser sector and it has become happening sector," Kumar observed.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, December 05 2017. 20:15 IST
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