Fertiliser sector meet to discuss high tax on raw materials under GST, unpaid subsidies

The fertiliser industry is expected to use its annual conference scheduled to be held here from Tuesday as a platform to air its woes and concerns. Its grievances range from high tax on certain raw materials under the Goods and Services Tax (GST) regime and unpaid subsidies, to long-pending revision of commission to the dealers, industry sources said.

It would also place before the authorities suggestions to turn around the loss-making industryso that it can contribute to growth of agriculture. The concerns mainly revolve around the urea fertiliser industry, where both prices and production capacities are regulated by the government.

“The industry needs to be decontrolled so as to unleash its full potential. In the immediate term, urea policy needs to assure that urea units are able to recover their full cost of production, not incurring losses. In the medium term, the NBS (nutrient-based subsidy) policy should be extended to urea and thereafter full decontrol of industry and all subsidies directly given to the farmers,” the Fertiliser Association of India (FAI) said in a statement.

Currently, the NBS policy was applicable only to phosphatic and potassic fertilisers.

“Almost 50 per cent of plants producing urea fertiliser are in losses. The industry as a whole has been incurring losses, particularly in the last three years. This year we expect our losses to be ₹579 crore,” said FAI Director General Satish Chander. “Farm productivity in India is at its worst currently. It requires a lot of fixing. Our neighbours like China and even Bangladesh are much ahead in terms of productivity,” said FAI Chairman KS Raju.

“We can fix this together. But for that we need to produce better and innovative nutrient products. The industry can invest to produce new products only if it turns profitable,” he said. The fact that no domestic industry came forward to set up new units in the last 20 years is a clear pointer to the health of the industry, added Raju, who is also the Chairman of the Hyderabad-based Nagarjuna Group.

Chander said Indian fertiliser industry, despite its woes, is one of the most efficient in the world. “We are not saying this. Others have acknowledged this,” he said.

The industry has made several representations to the government in the past requesting it to reduce the GST on its inputs from 18 per cent to 5 per cent.

While the GST Council, in its last round meeting, reduced GST on sulphur from 18 per cent to 5 per cent, the tax on ammonia and phosphoric acid is still at 18 per cent. “We hope the government would take a considerate decision sooner than later,” said Chander.

FAI also said the government should bring natural gas under GST to reduce the cost of urea production. The industry was suffering because natural gas, the main feedstock for urea plant, was priced much higher in India. Bringing it under the GST would help the industry as it would get input tax credit, said Chander.

According to the FAI official, between April and October 2017, urea production in the country was 13.53 million tonnes (mt) as against 14.09 mt during the same period last year. Imports during the period were 3.718 mt against 4 .007 mt during the corresponding period last year. The total consumption during the current financial year is expected to be 31 mt, he said.

The three-day event is expected to be addressed by Anant Kumar, Union Minister for Chemicals and Fertilisers, officials from the Agriculture Ministry,captains of domestic fertiliser industry and experts from the international fertiliser industry.