India acts to reduce cost of urea supplies to farmers

NEW DELHI (Reuters) - The Union Cabinet approved a move on Tuesday to supply gas for urea production at a uniform price to fertiliser plants through a pooling mechanism, lowering costs and boosting production of India's most widely consumed fertiliser.

The move is expected to save 15.5 billion rupees ($250 million) by reducing India's reliance on urea imports, the government said in a statement after Prime Minister Narendra Modi chaired a cabinet meeting.

India produces 22 million tonnes of urea a year, but has to import 8 million tonnes more to meet growing domestic farm demand.

The cabinet also gave approval for the revival of two fertiliser plants that have been idle for over a decade, in a bid to improve access to local supplies of urea in eastern parts of the country.

($1 = 62.3091 rupees)

(Reporting by C.K. Nayak and Krista Mahr; Editing by Douglas Busvine)