Fertiliser companies get department notice for violation of NBS norms

Every year, around 10-12 companies are registered under NBS scheme

A number of fertiliser companies have been found to have violated norms of the nutrient based subsidy scheme (NBS) by not importing subsidised non urea fertiliser for the last two years.

Accordingly, the department has sent notices to all companies for explaining failing which they stand to lose their registration.

Official sources stated that in the last two years, there has been an increase in companies registered under NBS scheme by around 10-12 every year.

However barring a few, there has been no import of fertilisers in the category of potash and phosphorus and thus it is an abuse of a very primary condition to get registered under the NBS scheme.

According to officials, it is necessary to check that only serious players get the registration and such companies which do not import or import very minimal amount just to retain the registration needs to scrapped. Currently, there is no information with the department as to what these companies are actually doing all these two years after getting registered under NBS.

As per the extant conditions, a new importer becomes eligible for subsidy on completion of two years from the date of first import after induction into the NBS scheme. Under this scheme, the company should have imported at least a minimum quantity of 30,000 MT in two years out of which a minimum of 15,000 MT in any one year.

Nutrient Based Subsidy (NBS) Policy has been implemented in continuation of the erstwhile Concession Scheme because of various shortcomings in the previous scheme.

These were marginal response of agricultural productivity to additional fertiliser usage in the country, leading to near stagnation in agricultural productivity and consequently agricultural production.

Besides, the fertiliser sector worked in a highly regulated environment with cost of production and selling prices being determined by the Government, due to which fertiliser industry suffered from low profitability as a result this sector could not attract investments.

The innovation in fertiliser sector also suffered, as very few products were introduced by fertiliser companies, since they get out priced by subsidised fertilisers.

The industry had no incentive to focus on farmers leading to poor farm extension services, which were necessary to educate farmers about the modern fertiliser application techniques, soil health and promote soil test based application of soil and crop specific fertilisers. Above all, subsidy implication was very high.

To overcome above deficiencies, a Nutrient Based Subsidy Scheme has been implemented with the expectation that it will promote balanced fertilisation of soil, which will lead to increased agricultural productivity and consequently better returns to the farmers.

The decontrolled scenario is also expected to promote competition leading to efficiencies in production and import. In the long run, the policy is expected to stabilise demand and supply situation and also contain the subsidy outgo.

This is because, rather than doling out subsidy to the overall sector of fertiliser irrespective of nutrient component , NBS focuses on component wise subsidy like phosphorous, nitrogen and phosphates etc.