Fertiliser industry calls for import duty cut on raw materials

Fertiliser industry body FAI has sought relaxation in import duty on raw materials used for producing complex nutrients as domestic production has become unviable due to rise in cheap imports of finished products.

Fertiliser Association of India (FAI) accused foreign suppliers of forming cartel and keeping raw material prices artificially higher to dump the complex fertiliser, including Diammonium phosphate (DAP),in the country.

Exporters of raw materials and finished products are same entities. These entities are pricing the raw materials and finished products in a manner that it is completely unviable to produce in India, FAI Director General Satish Chander said on Wednesday.

Leading fertiliser firm Tata Chemicals has suspended production of DAP at its Haldia plant due to policy and taxation issues which have not been addressed, he said.

At present, there is 5% import duty on phosphoric acid, ammonia, sulphur and 2.5% on rock phosphate. The duty on finished products like DAP and complex fertiliser is also at the same level, he added.

"Industry has been crying hoarse for slashing the import duty on raw materials from last several years but to no avail. Simultaneously, import duty on products not covered by bound rate other than the DAP should also be raised to a level of 10%," Chander said.

Free imports, same level of custom duty on inputs as well as finished products and finally, equal subsidy on imported and domestic products have adversely affected the domestic industry, he said.

"Same level of import duty on inputs and finished products has specially posed unfair competition," he added.

Domestic fertiliser industry does the value addition of almost $40 per tonne of fertiliser which adds to the GDP, and also provides employment in fertiliser and ancillary industries, the FAI said.

These steps are required to save capital assets of hundreds of thousands of crore from turning non-productive.