India Seeks Preferential Treatment From Global Fertiliser Suppliers

With fertiliser subsidy expected to rise sharply to $27 billion this fiscal on high global rates, the government on Wednesday asked global suppliers to give preferential treatment to a big market like India and asserted that it will not tolerate price cartelisation.

India is a major importer of fertilisers as well as raw materials. It imports about 9 million tonnes of urea to meet domestic demand. Significant quantities of di-ammonium phosphate and muriate of potash are also imported.

Addressing a conference organised by the Fertilisers Association of India, Chemicals and Fertilisers Minister Mansukh Mandaviya said the government has taken various reforms and increased subsidy to ensure farmers get soil nutrients at an affordable price.

He said the government will promote alternate fertilisers like nano liquid urea and nano DAP as part of its efforts to become self-reliant.

Mandaviya invited global companies to set up fertiliser manufacturing plants and storage facilities in India, besides partnering with Indian firms to supply soil nutrients.

The minister also expressed concern over the rise in the government's fertiliser subsidy bill because of the sharp rally in global prices, saying whatever happened in the global market following the Russia-Ukraine war was unfair and not correct.

Mandaviya, who is also the health minister, noted that India supplied medicines to more than 150 countries during the Covid-19 pandemic but did not increase prices or compromise on quality.

"During the last three years, we have witnessed an increase in prices of fertilisers and raw materials. Our government has brought various reforms and ensured that fertilisers are made available at affordable prices to Indian farmers.

"We have done this by increasing the amount of fertiliser subsidy from $10 billion for the pre-pandemic year 2019-20 to almost $27 billion in the current year," he said.

The minister said the world is currently facing severe challenges regarding the cost and availability of fertilisers.

Mandaviya said there is a dire need for global stakeholders to have reasonable and transparent mechanisms and take long-term views in dealing with issues of fertilisers in the larger interest of global food security.

Long-term agreements will have an important role to play in making steady progress in this direction, he added.

The minister highlighted that the government has facilitated various such agreements and MoUs between Indian fertiliser companies and foreign suppliers to ensure consistent supply.

"This is also an opportune time for global suppliers to understand the dynamics of big market like India and give us a preferred treatment," he said.

Noting that every challenge throws an equal opportunity, Mandaviya said the crisis has made countries like India rethink and replan on alternatives, including nano fertilisers.

"In the times to come we would certainly choose fair and frank partners, rather than tolerating cartelisation," he asserted.

Mandaviya said the country will become self-sufficient in urea by 2025 as the government is reviving many closed plants.

At present, the country's urea (conventional) production is 260 lakh tonnes, while around 90 lakh tonnes are imported to meet local demand.

The government is making available fertilisers—namely urea and 25 grades of P&K fertilisers—to farmers at subsidised prices through fertiliser manufacturers/ importers.

Under the Nutrient Based Subsidy scheme, which is being implemented since April 2010, a fixed rate of subsidy (in rupees per kilogram basis) is announced for nutrients namely nitrogen, phosphate, potash and sulphur by the government on an annual basis.

The subsidy rates per kg for the nutrients nitrogen, phosphate, potash and sulphur are converted into per tonne subsidies on the various P&K fertilisers covered under the NBS.

In case of urea, the Centre fixes the maximum retail prices and reimburses the difference between the maximum retail price and production cost in the form of a subsidy.