FAIs Budget Expectations: Micro-management of industry needs to be avoided

Fertilisers are subsidised by the GOI. Increase in subsidy is due to increase in cost of feedstock/raw materials

July 07, 2014 11:04 IST | India Infoline News Service

Budget allocation for 2014-15 should be adequate and realistic to take care of the requirement of subsidy including the carry forward of unpaid subsidy from previous year. GOI should factor in the impact of proposed increase in price of domestic natural gas which will be substantial. Fertilisers are subsidised by the GOI. Increase in subsidy is due to increase in cost of feedstock/raw materials. Additional domestic gas needs to be allocated to the fertiliser sector by GOI at reasonable price to check cost of production and hence fertiliser subsidy. There is also need for elimination of customs duty on import of raw materials to enable domestic P&K industry become competitive. Micro-management of the industry needs to be avoided. Government should actually look at liberating (decontrolling) the overall fertilizer industry for providing better products and services to the farmers.


FAI Wish list

  1. Balanced fertilization is important.
  2. Pricing policy of fertilizer plays a key role in Balanced nutrition to plants.
  3. Price of urea needs to be increased in the interest of farmers income, soil health and for increasing overall crop production and productivity. Subsidy saved with increase in MRP of urea can be used for the agricultural development programme in vogue by the Government of India. This will lead to overall balanced fertilization.
  4. Decline in Nitrogen use efficiency needs to be arrested.
  5. Payment of subsidy should be made in timely manner. The procedure of payment should be kept simple. However, these are getting complicated. Currently payment of balance subsidy (10/15 % of P and K fertilisers and 5 % of urea) is pending from last 2 years.
  6. Corrections should be made in the current policy.
  7. Adequate budget should be allocated for payment of subsidy to the industry.
  8. Import dependency of N, P and K fertilisers is to the extent of 60, 93 and 100 per cent , respectively.
  9. Duty on raw materials like rock phosphate, sulphur, phosphoric acid and ammonia should be 0 % or fixed at 1%, so as to make domestic industry viable. As duty on finished product such as DAP is fixed at 5% (by WTO), this cannot be changed.
  10. Domestic gas must be allocated to fertiliser sector. The price of gas should be kept at a reasonable level.
  11. Need for decontrol of the fertiliser sector. Aim is to set the industry free and to allow them to work in a transparent environment. This will enable the industry to bring better products and services to the farmers.

Satish Chander, Director General, The Fertiliser Association of India

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