March 20, 2012
India''s fertiliser industry awaits urea''s new policy
In order to help reduce the dependence on imports, India''s fertiliser industry is keenly awaiting the new policy on urea.
"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 said.
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 fertiliser makers to set up and expand new plants.
India''s production of urea at 22 million tonnes is about five tonnes 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% for three years. This, plus abolition of customs duty on coal for next two years will have positive impact on raw material costs, he said.
The Budget proposal to provide weighted deduction of 150% on expenditure incurred for agricultural-extension services is in the right direction, Mukundan said, adding that exemption limit has been enhanced to 150% 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.