Fertiliser industry wants pricing policy

Indicating that the recent shortage of fertilisers in Karnataka was primarily in the P&K segments, the industry wanted the government to finalise its pricing and freight policies for the sector to encourage production.

"The low capacity utilisation in the phosphatic segment is due to the uncertainties in the government subsidy policies on P&K. The mounting subsidy bills and shrinking credit limits are also causing problems to the importers of P&K fertilisers like DAP. Unless the industry is assured of timely reimbursement of subsidy, no one would attempt to increase the production of these fertilisers," a top industry official said.

The recently announced policy on single super phosphate (SSP), which disallows small firms manufacturing less than 100,000 metric tonnes (MT) in a year from independently marketing their products have also been criticised.

"The DAP manufacturer cannot be blamed for stepping up the production. There is no guarantee that the government will reimburse the subsidy component unless the policy is in place. A long-term P&K pricing policy is what we need," the sources added.

Meanwhile, government officials informed that the P&K policy is likely to be announced any time now.

The industry's concerns over the finalisation of P&K pricing policy stems from the fact that the particular segment of fertiliser accounts for nearly half the total fertiliser subsidy bill being reimbursed by the government. In 2007-08, the government had to pay Rs 20,005 crore as P&K fertiliser subsidy due. This amount is expected to increase considerably during the current year.

"The industry need not have any apprehensions about the pricing policy. Further, the situation is not that bad. The companies are producing and importing sufficient quantity of P & K fertilisers to meet the current demand", they said.