BICP, according to industry sources, was to submit this report on July 15. However, due to some delay it has been granted an extension. Sources said that BICP has almost completed the study which it was asked to conduct by the ministry of agriculture. BICP has already collected data from manufacturers to estimate the actual cost on production of DAP.

The study would enable the government to ascertain the correct level at which concessions should be given. The decontrolled fertilisers under consideration are diammonium phosphate (DAP) and muriate of potash (MOP).

While DAP is both indigenously produced and imported to meet the demand in the country, MOP is entirely being imported into the country. The ministry of agriculture has for the first time appointed BICP to conduct the study. This will beestimated through a study of the gap between production costs and the currently allowed maximum retail prices. If input prices are found to have risen beyond earlier assessed levels, the concessions allowed to fertiliser firms will have to change accordingly.

This will enable the government to arrive at a concession to be given on these decontrolled fertilisers. The concession amount for complex fertilisers will be proportionately calculated.

At present, the industry is reeling under cost escalation on inputs because of which some manufacturers are incurring losses on certain complex fertilisers.

It will also help the ministry keep a tab on how scrupulously manufacturers have calculated the increase in input costs. The study will help pick out the inefficiencies in calculating the cost of production in the system.