Fertiliser industry wants de-canalisation of urea imports

Presently, subsidy provided on urea is 90% on product cost while it is only 30% on other fertilisers

The Fertiliser Association of India (FAI) has listed de-canalising urea imports, bringing urea prices to reasonable levels and ensuring timely payment of subsidies as its top demands in the run up to the Union Budget 2015-16.

“Presently, urea is imported completely by the government. We have made a plea that urea imports be de-canalised and prices of urea be brought to reasonable level to ensure balance in ferttiiser use. We have also urged the Government of India to ensure timely payment of subsidy to fertiliser makers. For PPL alone, the pending subsidy is about Rs 400 crore. The FAI has already submitted its pre-Budget memorandum to the Centre,” said D S Ravindra Raju, whole-time director of Paradeep Phosphates Ltd (PPL).

Presently, subsidy provided on urea is 90 per cent on product cost while it is only 30 per cent on other fertilisers. This has created a huge imbalance in fertiliser consumption, prompting the farmers to buy more urea that has adversely impacting soil health, Raju said.

“One of our demands is to de-regulate the fertiliser sector to enable direct payment of subsidy to the farmers. Both de-regulation of the fertiliser sector and de-canalisation in urea imports is the need of the hour. Let competition and market forces determine fertiliser prices”, Raju said. At present, fertiliser subsidy is paid directly to the manufacturers of fertilisers. In case of urea, the retail price has been fixed at Rs 5,360 per tonne by the government and the difference between cost of production and retail price is paid as subsidy to manufacturers. Urea prices have remained largely unchanged over the last decade. “No greenfield fertiliser unit has come up in the country in the last two decades. This has raised the country’s import dependence. Timely payment of fertiliser subsidies will help stimulate new investments in the sector,” he added.

At a seminar held in December last year, FAI chairman and PPL’s managing director S S Nandurdikar had called for allocation of sufficient quantity of domestic gas in order to encourage domestic production of urea as well as phosphatic and potash fertilisers.