The Cabinet has deferred a decision on giving fertiliser firms the freedom to fix the maximum retail price of di-ammonium phosphate.
In April, the Government had restricted fertiliser companies from hiking the MRP of DAP by more than Rs 600 a tonne from the prevailing rate of Rs 10,750 a tonne.
However, due to rising global prices, the companies did not contract DAP imports, fearing losses because they were not allowed to raise the MRP beyond the cap fixed by the government. Now, the country is facing a huge shortage of DAP.
Consequently, the Fertiliser Ministry had moved a proposal to remove the restriction in view of soaring DAP prices globally and shortages at home.
“The decision (on DAP) has been postponed at the request of the minister (of fertiliser). The minister was not present,” the Information and Broadcasting Minister, Ms Ambika Soni, told the media after the Cabinet meeting.
Fertiliser companies have so far entered contracts for the import of 6 million tonnes of DAP, of which only 1.5 million tonnes have arrived against over 2 million tonnes in the year-ago period, according to official data.
The annual requirement of DAP in India is about 11-12 million tonnes. Over 8 million tonnes is met through imports from Morocco, Jordan, China and the US and the rest is produced indigenously.
“Global prices are rising and if the trend continues, then manufacturers will incur a loss if the present cap of Rs 600 per tonne is not removed,” said the Fertiliser Association of India.
DAP prices have gone up in the global markets to over $600 per tonne from $460 level around 7-8 months ago.
On April 28, the Cabinet had approved a hike in the benchmark price (which is used to determine the subsidy level) of DAP to $612/tonne from the current level of $580/tonne to insulate fertiliser firms from high global prices and maintain domestic prices at affordable rates for farmers.