The Hindu Business Line : GoM on fertilisers meeting today to discuss new investment policy

New Delhi, Nov. 1 The new fertiliser investment policy being proposed by the Government to allow setting up of privately owned plants that will not be bound by current price controls would be top of the agenda when the Group of Ministers (GoM) meet on Friday.

“The new investment policy proposes to give more impetus to the domestic fertiliser industry and reduce the dependence on imports. Once the policy comes into force it will also help reduce the subsidy burden of the Government and this is one of the major issues that will come up before the GoM,” the Minister of Steel, Chemicals and Fertilisers, Mr Ram Vilas Paswan, told Business Line.

No Govt interference

The proposed policy also says that privately owned fertiliser plants will be free to produce in whichever manner they want without any interference from the Government.

“The policy will also allow the producer to fix the price for the new units at which they want to sell the product. However, the domestic fertiliser prices for the farmers will continue to be regulated and determined by the Government,” an official in the Department of Fertilisers (DoF) said.

Currently, the Government fixes the price at which a producer sells to the Government as well as the maximum retail price. The difference is the amount of subsidy borne by the Government. The policy also proposes to allow up to 90 per cent of the import price, which is exclusive of the customs duty but includes ocean freight and port handling charges.

The GoM is headed by the Agriculture Minister, Mr Sharad Pawar, and includes the Finance Minister, Mr P. Chidambaram, the Minister for Steel, Chemicals and Fertilisers, Mr Ram Vilas Paswan, and the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia.

In the last meeting the GoM had approved a couple of short-term measures that were presented by the Department.

“The GoM approved that the products coated with micro-nutrients will be recognised under subsidy schemes. The cost of coating of the micro-nutrients such as zinc, boron and neem would be passed on to the farmer within a certain per cent of the maximum retail price,” sources said.

Complex fertilisers

The GoM had also decided to lower the retail price of complex fertilisers. Under the new pricing mechanism, the prices of the nutrient-based fertilises may be brought down from present Rs 8,100 to Rs 5,804 per tonne except in the case of single super phosphate (SSP).

“The difference will be borne by the Government and the additional subsidy cost is likely to be around Rs 1,200 crore. But the Government is ready to incur this additional subsidy as it would cover a large number of fertilisers,” the official pointed out.

Currently, the subsidy exists for only 11 complexes and three fertilisers. But the DoF and Agriculture Ministry want the subsidy regime to be extended to the 200 fertilisers and complexes which are a part of the Fertiliser Control Order. This is being done to shift to the nutrient-based subsidy regime from the current product-based subsidy regime which is also under the consideration of the GoM.