The crisis-ridden fertiliser industry has sought the Government of India?s intervention for reviving its sagging health and for formulating policies to attract fresh investment into the sector. In its recent presentation to the department of fertilisers, the fertiliser industry has painted a bleak picture and claimed that the recent policies with excessive regulations and controls have stifled the domestic fertiliser industry which has not witnessed major investment for about a decade or so.
The Fertiliser Association of India (FIA), on behalf of the ailing industry, has argued that the government should expedite the investment policy to encourage capacity additions within the country. All additional production beyond 100% of existing assessed capacity whether it is through debottlenecking, revamp, retrofit of existing units or by setting up brownfield, greenfield projects be encouraged under a liberalised policy based on international benchmark like import parity price (IPP). The capital incentive schemes for conversion of non gas based urea units to gas as proposed in NPS stage III policy also needs to be expedited to facilitate early conversion. Incentives like tax, holiday, exemption from excise and customs duty would go a long way in reducing cost of fertiliser projects and in attracting fresh investment in the sector. These measures would also help in reducing cost of production, and, consequently, containing subsidy under the present policy regime and in making industry competitive in deregulated environment.
These sops are necessitated especially when the centre has proposed an investment of Rs 15,000 crore for the capacity addition of 5 million tonne in the 11th Plan.
According to the FAI, the current supply demand gas has already increased to about 10 million tonne of fertiliser material and this is likely to increase further with business as usual and cross 16 million tonne by the end of 11th plan period.
Such heavy imports would lead to serious infrastructural bottlenecks in terms of port capacity, rail and road transportation, storage and inland distribution.
The industry has voiced concern over an inadequate allocation of funds in successive union budgets for fertiliser subsidy. During current year, the allocation made so far is only about Rs 36,500 crore including Rs 14,000 crore allocated in the first supplementary grant. This is against an estimated need of over Rs 48,000 crore. The industry has noted that the centre has not provided anything in the second supplementary grant.