India Plans Pricing Policy for Additional Fertilizer Capacity

 Tag: Chemicals & Fertilizer

India may seek to attract investment in additional domestic fertilizercapacity by linking prices to global rates,Ram Vilas Paswa, minister in charge of the industry, said in New Delhi today.

The proposed move will apply to fertilizer produced with theadditional capacity. Fertilizer prices are subsidized by about 74percent to make it affordable to farmers.

The insufficient availability of gas, along with pricing and subsidy policies, have discouragedcompanies from adding fertilizer manufacturing capacity. This hasled to a more than six fold increase in imports of soil nutrientssuch as urea in the past four years to meet local demand.

The government wants to raise local output to cut the nation'sdependence on imports. It plans to double urea capacity by the year ending March 31,2012, by addressing gas availability and benchmark prices withinternational rates, said J.S. Sarma, fertilizer secretary.

The ministry of petroleum and natural gas has pledged supply tofertilizer makers as gas production increases, Sarma said.which increased as much as 9.8 percent, rose 6.5 percent to 76.15rupees.

India's fertilizer subsidy may more than double to 950 billionrupees ($22 billion) in the year to March 31 because of risinginternational prices and higher raw material costs. The governmentspent 403.4 billion rupees on subsidies in the year ended March 31,the ministry of chemicals and fertilizer said.