Fertiliser cos may soon get full freedom to hike DAP rates

In a bid to boost supply of the key farm nutrient, the government is likely to remove the restriction on fertiliser firms that they can hike the maximum retail price of Di-ammonium phosphate (DAP) only by up to Rs 600 a tonne.

In view of soaring DAP prices globally and shortages at home, the Cabinet meeting scheduled for tomorrow will discuss the Fertiliser Ministry's proposal to remove the restriction.

According to sources, the ministry has proposed the removal of the cap as it wants to ensure enough supply of DAP for the ensuring kharif sowing season.

In April, the government had allowed companies to hike MRP of DAP by up to Rs 600 a tonne from Rs 10,750 a tonne.

However, due to rising global prices, they did not contract DAP imports fearing losses because they were not allowed to raise the MRP beyond the cap. Now, the country is facing huge shortage of DAP.

Fertiliser companies have so far contracted for import of 6 million tonnes of DAP, of which only 1.5 million tonne has arrived, as against over 2 million tonne in the year-ago period, said a senior ministry official.

The annual requirement of DAP in India is about 11-12 million tonne. Over 8 million tonne is met through imports from Morocco, Jordan, China, the US and the rest is produced indigenously.

"Global prices are rising and if the trend continues then manufacturers will incur loss if the present cap of Rs 600 per tonne is not removed," said Fertiliser Association of India.

DAP prices have gone up in the global markets to over $600 per tonne from $460 level in the past 7-8 months.

On April 28, the Cabinet had approved a hike in the benchmark price (which is used to determine subsidy level) of DAP to $612/tonne from the current level of $580/tonne to insulate fertiliser firms from high global prices and maintain domestic prices at affordable rates to farmers.