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Govt accords priority to Fertiliser Sector Reforms New Urea Policy Soon

New Urea Policy aims at higher domestic production of the soil nutrient and balanced used of fertilisers

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Fertiliser Ministry has prepared a New Urea Policy (NUP), which aims at higher domestic production of the soil nutrient and balanced used of fertilisers.
According to sources, the policy, which has accommodated views and concerns of all stakeholders including Fertiliser Association of India ( FAI) through series of consultations, is expected to be approved by the government as soon as Union Cabinet chaired by the Prime Minister Narendra Modi meets after his visit to China and other countries. The new policy is expected to be in place by June-end.

Fertiliser sector is at cross-road and there are several issues require urgent attention and action. Recently, an informal group of ministers headed by Home Minister deliberated on these issues and now the government is prepared to address these issues in a calibrated manner and the implementation of the new urea policy was one of its top priorities.

According to FAI, at present the country imports about 8 million tonnes of urea to meet the annual demand of 30 million tonnes. India produces about 22 million tonnes of urea annually.

Urea, which is under government's control, is being sold at a highly subsidised rate of Rs 5,360 per tonne. The difference between the maximum retail price (MRP) and the cost of production is reimbursed to manufacturers as subsidy by the central government.The main focus of the ministry is to take steps for boosting urea production by making plants more energy efficient.

Bringing reforms in the sector without raising urea prices is the main challenge for the the government. Experts pointed that the proposed policy should provide framework for balanced use of fertilisers. The correct proportion in which Nitrogen (N), Phosphorus (P), and Potassium (K) should be used is 4:2:1, they recommended.

It is widely accepted that due to highly subsidised price of urea, the main provider of nitrogen is cheap while the other two elements are expensive. As a consequence, fertiliser use in India is taking place in the ratio 8.2:3.2:1.

Minister of State for Chemicals and Fertilizers Hansraj Gangaram Ahir recently said in Parliament that the NUP is under the consideration of the government. “There is no proposal to increase MRP of Urea. The MRP of urea is statutorily fixed by the government and at present it is Rs. 5360 per MT ,” he added.
Increasing production of Urea is a major concern. The Centre has already taken steps to boost domestic production of urea, by forming joint ventures for the revival of two closed fertiliser plants at Talcher and Ramamgundam. The government has also approved revival another two plants and has made changes in the urea investment policy, under which it will permit setting up of new plants.

No brownfield/greenfield investment in the fertilizer sector has taken place since 1999. The availability of gas has been one of the major limiting factor to the growth of urea industry in the country. Presently, the availability of domestic natural gas is not even sufficient to meet the demand of existing gas based urea units in the country. Due to shortage of domestic gas, many Naphtha based urea plants which have converted to gas recently, are meeting its requirement of gas by using Regasified Liquefied Natural Gas (RLNG).

The Fertiliser Minister said that the department has received twelve proposals for setting up of Revamp, Expansion, Revival and Greenfield plants based on the New Investment Policy (NIP) - 2012.
 

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