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Hike in phosphoric acid prices for subsidy okayed

Our Bureau

New Delhi , Sept. 8

THE Cabinet Committee on Economic Affairs (CCEA) today approved the increase in prices of phosphoric acid for the current financial year for calculating the subsidy payable to complex fertiliser manufacturers, particularly the di-ammonium phosphate (DAP) manufacturers.

Phosphoric acid is used to make DAP and all other complex phosphorous-based fertilisers.

Last year, Indian manufacturers sourced phosphoric acid from the international market at a rate of $356 per tonne.

The Cabinet approved a price of $395.45 per tonne following recommendations from the Committee of Secretaries (CoS) that stated that there is "no unreasonableness" in the Department of Fertiliser's (DoF) proposal for a higher subsidy on account of increased price.

According to estimates made by the DoF, the result would be an increased outgo of around Rs 600 crore on this account, which the Government has now agreed to.

This issue had been lingering on since April this year when a Phosphoric Acid Consumer Group, representing all the DAP manufacturers negotiated a price of $398 per tonne.

Briefing reporters after the CCEA meeting, the Finance Minister, Mr P. Chidambaram, said that henceforth the DoF would evolve a new methodology for working out concessions of phosphorous and potassium-based fertilisers on the basis of international prices of DAP.

This price has to be adopted as benchmark in consultation with the Department of Expenditure (DoE) and Department of Agriculture and Co-operation.

Also, the cost plus system would be substituted by a more transparent and cost-effective system, which may lead to savings, he said.

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