As the import of urea is based on demand supply gap dynamics, the Government of India has allocated Rs. 14,000 Crore for Imported Urea in the Budgetary Estimates (BE) 2017-18, according to Rao Inderjit Singh, Minister of State for Planning and Chemicals & Fertilizers.
Replying to a query on a written reply to a question on innovative solutions taken by the government to cut urea consumption, in Lok Sabha, Singh informed that with the objective of encouraging balanced use of fertilizers, Department of Fertilizers has made it mandatory for all the domestic producers of urea to produce 100% as Neem Coated Urea (NCU). Entire quantity of both indigenously produced urea and imported urea is being neem coated with effect from 1st September, 2015 and 1st December, 2015 respectively.
One of the primary benefits of Neem coating is the slow release of urea, which results in increased Nitrogen Use Efficiency (NUE). Due to NUE, the consumption of Neem Coated Urea reduces as compared to normal urea.
The Minister also informed that in the light of increased effectiveness of NCU, the government has decided to introduce 45 Kg bag of urea in place of existing 50 Kg bags and a period of six months have been given to urea units as lead time to ensure smooth implementation of the policy.
Further, the Minister stated that since farmers mostly assess the requirement of urea in terms of bags for agriculture purpose, it is estimated that the availability of urea in 45 Kg bags instead of 50 Kg bag may bring down consumption of Urea by 10%.
The country had imported 81.26 lakh tonnes of urea in April-January period of 2015-16 fiscal. Urea imports have been less so far because there is a better domestic supply and introduction of neem-coated urea has restricted diversion to industrial use to some extent. There was higher carryover stock in the country following an increase in the domestic urea production by 20 lakh tonnes to 245 lakh tonnes last year.
The annual domestic demand of urea is estimated at 300 lakh tonnes. Nearly 245 lakh tonnes are now being met through domestic production. The rest is met through imports. Urea is a controlled fertiliser and is sold at a fixed selling price of Rs 5,360 per tonne. The difference between cost of production and selling price is paid as subsidy to manufacturers.
All India consumption of urea for the last 3 years:
Urea Consumption (LMT)
2016-17 (NCU Consumption)