Industry awaits new policy on urea

Mumbai: The fertiliser industry is keenly awaiting the new policy on urea, which will help in reducing the dependence on imports.

"New policy seems to be on agenda of the government, and we hope it will be announced at the earliest, as this is a measure to reduce dependence on urea imports," Tata Chemicals Managing Director, R Mukundan, told PTI.

Last month, a group of ministers headed by Finance Minister Pranab Mukherjee cleared the new urea investment policy to boost urea production by offering incentives to fertilizer makers to set up and expand new plants.

India`s production of urea at 22 million tonnes (mt) is about 5 mt short of demand, requiring imports. The Union Budget stresses attaining self-sufficiency over next five years, which is a welcome step, Mukundan said.

Import of equipment for urea projects has been fully exempted from basic customs duty of 5 percent for 3 years. This, plus abolition of customs duty on coal for next 2 years will have positive impact on raw material costs, he said.

The Budget proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services is in the right direction, Mukundan said, adding that exemption limit has been enhanced to 150 percent for capex in urea plants, which will boost the investment.

To promote balanced nutrition, which is core for long-term food productivity, FM could have addressed the issue of rising disparity between urea and non urea fertilisers, he said, adding that no issuance of fertiliser bonds for subsidy payments is a forward-looking step.

He also pointed out that in the case of potassic-phosphatic (P&K) fertiliser, use of single super phosphate (SSP) will be encouraged. SSP is manufactured entirely in the domestic sector and enhanced production would bring down India`s dependence on imports in the P&K sector.

"Fertilizer subsidies and interest subvention policy does provide access to the much-needed credit and fertilizer for the farmers, however they may not be sustainable in the long terms. This is in a way a protectionist measure which is weakening our position in an era when most countries are demanding phasing out of subsidies," PwC India Executive Director Sambitosh Mohapatra said.

"Mobile-based fertilizer management system is a highly ambitious project; its success may pave the way for adoption of technology-based solutions for other schemes such as Public Distribution System (PDS), Food Grain Procurement, etc." The decision to support key growth areas in agriculture such as research, irrigation displays a long-term view towards improving the agricultural situation of India, he said.