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Every 10 paise decline of rupee against the dollar pushes up the import cost of di-ammonium phosphate (DAP) by Rs 75 a tonne, claim fertiliser makers. However, they don't intend to pass on the high import costs to farmers, but renegotiate contracts with foreign suppliers to cut prices in view of currency volatility.
India relies on imports to meet 90 per cent of its phosphorous requirement, while potash is totally imported.
The Fertiliser Association of India, in a statement on Saturday, said the industry has decided not to increase the maximum retail price of fertilisers for now. “The industry has also decided not to ask the Government for any additional subsidy,” FAI Director-General, Mr Satish Chander said. For 2011-12, the fertiliser subsidy was budgeted at Rs 49,997.87 crore. On Friday, the Centre sought Parliament's approval for an additional fertiliser subsidy of Rs 13,778.93 crore. “It (additional subsidy) has no bearing on the import bill,” Mr Chander said, estimating the total requirement for the year at about Rs 80,000 crore.
The rupee has seen a sharp decline against dollar in the past one month of Rs 6.29 at the beginning of November till date. The fertiliser imports were contracted when the rupee was at Rs 49.5 vis-à-vis the dollar against the prevailing rate of Rs 52.5.
“If we take into consideration other costs like taxes, duties and port charges and the prevailing exchange rate, the increase in cost of import of DAP is Rs 2,500 per tonne. This means that the price of DAP need to be increased by Rs 125 a bag of 50 kg. Similarly, the increases will be there in respect of other phosphorous and potash fertilisers,” Mr Chander said.
High global prices coupled with a weak rupee have made fertiliser imports costlier in the past five to six months. The DAP prices, which ruled at Rs 11,000 a tonne at the beginning of kharif season in June have shot up 65 per cent to Rs 18,500 a tonne now. The Government had decontrolled the prices of non-urea fertilisers such as DAP and NPK by introducing the nutrient-based subsidy from April 2010. Since then the prices of DAP have almost doubled from a level of Rs 9,350 a tonne.
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