Fertiliser Association urges Centre to continue subsidy for naptha-based units

The association urges union govt for policy reforms

The Fertiliser Association of India (FAI) has urged the union government for immediate policy reforms for the sector and to find and promote a balanced and efficient use of fertilisers. The industry association, representing 1,406 members has also asked the Government to continue with subsidy for naphtha-based units till it ensures piped gas connectivity.

Indian fertiliser market is of Rs 1.32 lakh crore and there are over 30 units across India which produces all kinds of fertilisers. Last years, India had produced 22.5 million tonnes of fertilisers. It consumes 51 million tones of fertiliser and imports the rest.

According to FAI, fertiliser industry is a key sector of Indian economy. The fertiliser consumption of India is about 51 million tonnes in 2013-14 and the food grain production is 265 million tonnes in 2013-14. India is a largest consumer of fertilisers after China.

S S Nandurdikar, chairman, The Fertiliser Association of India  said “FAI is looking forward to new policy reforms in this sector so that eventually we move towards de-control and government policies enable fertiliser industry to play its rightful role in enabling Indian agriculture to live up to its potential.”

“It is a very serious business. Unfortunately, government has not paid much attention to the issues related with the issues. It is connected with the 140 million farmers of our country and seriously related with our food production.  Also, the gas supply is a serious issue for running the units. We want the subsidy for naphtha-based units to continue till it ensures piped gas connectivity. Even though, some units has made additional investments for the regular gas supply, government has failed to supply enough gas to them,” said Sailesh Mehta, chairman and managing director, Deepak Fertilisers and Petrochemicals.

Last year, the fertiliser industry had been supplied roughly 31.50 million standard cubic metres (mscm) and the government has capped the supply at this level.

Fertiliser Association of India director general Satish Chander said, “The health of the fertiliser industry is not good and is quite fragile due to stifling controls on the industry. Also the pricing policies of the Government are adversely impacting the soil health and the farmers’ income. We are increasingly dependent on imports as there has not been any addition in the capacity of fertiliser production in the country for the last 15 years.”

He further added, "The policy of the Government of India is to ensure availability of fertilisers at affordable prices to the farmers. The retail prices of fertilisers to the farmers are much lower than their cost of production or cost of imports. The Government of India reimburses the difference in cost of production/ import and the retail prices to fertiliser companies. This is what is known as fertiliser subsidy. It is important to note that fertiliser subsidy is not for fertiliser companies but for farmers. Subsidy is a stigma on this sector and it is not running on subsidy. We are efficient to produce quality fertilisers of global standards. However, government has promised a new comprehensive fertiliser policy and we are hopeful that government will correct the present situation."

According to FAI, the government has decided to allow closure of three urea plants in the states of Karnataka and Tamil Nadu under urea pricing policy. This will result in loss of production of 1.5 million tonnes urea per annum. These plants have made investment to change feedstock from naphtha to gas as directed by the Government. However, Government on its part has not been able to ensure availability of gas and is not allowing to operate on naphtha till gas is available in next two years.