The Fertiliser Association of India (FAI), a non-profit and non-trading company, today expressed their opinion on the various government policies on the fertiliser sector.
According to FAI, the government of India implemented pricing policies for fertiliser, which proved beneficial in increasing fertiliser consumption and agriculture productivity, 1960s and 1970s during green revolution. Thereafter, the policies introduced have been unattractive of fresh investment and the existing industries are finding it hard to survive.
Under the pricing policy of 2008, the existing urea plants are not being allowed to produce to their full revamped capacity because the production beyond the old capacity has become unviable. Decision to revise the policy was ignored by the Department of Fertilizers in spite of intense discussions of one year under the previous government. This has resulted in loss of urea production, which will obviously be made by imports on which the government has no control over the international problems.
Speaking on the occasion, SS Nandurdikar, chairman, FAI added, "We feel that the industry be completely decontrolled and as a first step, Urea should be brought under NBS. The policies should encourage domestic production and discourage our dependence on imports, owing to the Prime Ministers 'Make in India' initiative. We feel that the government should act as a regulator and facilitate investment in production capacities in India and abroad. The present government also realizes need for reforms and has stated in unequivocal terms that there is an excess usage of urea and hence wastage of Rs 85 billion during 2013-14." Therefore, the most important task is that the huge fertiliser subsidy needs to be effectively utilized for its objective to increase the agriculture productivity with balanced fertilisation.
The FAI has urged the government that reforms process in the fertilizer sector should be taken forward on an urgent basis. It has been brought to the notice of the government that import duty on raw materials should be significantly lower than that for finished products as in fertiliser sector the duty on most of the imported raw materials is same as for finished products. This goes against the basic premise of encouraging domestic production.
It has also been observed there is under allocation for domestic urea production and over allocation for imported urea. Additional allocation of Rs 300 billion through supplementary grants should be made by the government to clear the back log and make the payment of bills up to February 2015 both for urea and P&K fertilisers.
The industry is struggling to comply with the payment procedures which have been made so complex that increased delays have resulted in non-payment of balanced subsidy bills pending since December 2012 and freight bills since 2008-09. There is a need for accountability so that huge losses incurred by financing cost for the borrowings to fund subsidy receivables are minimized. Also, there is a need for provision of paying interest on delayed payment of subsidy beyond stipulated time period.
Satish Chander, director General of FAI added, "The fertiliser industry has suffered for long due to improper policy implementation. There is an urgent need for proper reforms in the sector. The immediate target should be autonomy from stifling controls and correction in pricing policies. The industry should be allowed to operate in competitive environment which will result in self innovation in terms of products and services."
