Falling gas prices offer a breather to a subsidy-ridden fertiliser sector

Estimates say a 25.1% fall in natural gas prices, which makes up 50-80% of raw material cost in urea, could lead to a 12% in manufacturing cost; 28 of 31 urea plants in India are gas-based

The liquidity crunch stemming from the non-clearance of subsidy dues could severely impact the working capital cycle of India's fertiliser sector, the backbone of the country’s farm economy.

However, one factor that see has unexpectedly come to its aid is the fall in the prices of natural gas, the main raw material for making urea, the largest consumed fertiliser in the country.

According to some estimates a 25.1 per cent fall in natural gas prices could lead to a 12 per cent drop in the cost of producing urea, as gas accounts for 50-80 per cent of raw material cost of manufacturing