As India gears up to ramp up production of nano-fertilisers, questions arise regarding the technical feasibility and logistical implications of transition Recently, the Union Minister for Chemicals and Fertilisers Mansukh Mandaviya stated “Consumption of urea this fiscal is likely to be 8 percent less than in FY 2022-23 due to the use of its liquid nano variant. Because of this and higher domestic production, import of urea, the soil nutrient that accounts for 70 per cent of the fertiliser subsidy bill, declined more than a fifth on year in 2023. Further spread of nano urea consumption and the start of a new large urea plant (Talcher in Odisha) by September 2023 would lead to elimination of imports in two-three years”....
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Category: Fertilizers
The conundrum of fertiliser pricing
The fact is that non-urea fertilisers, in practice, have consistently remained under regulatory control In an office memorandum dated January 17, 2024, the Department of Fertilisers (DoF) has issued detailed guidelines for the evaluation of “reasonableness” of the MRPs (maximum retail price) for all non-urea fertilizers covered under the Nutrient Based Scheme (NBS). To be effective from April 1, 2023, the guidelines prescribe maximum profit margins that will be allowed for fertilizer companies – 8 per cent for importers, 10 per cent for manufacturers and 12 per cent for integrated manufacturers (those producing finished fertilizers as well as intermediates such as phosphoric acid and ammonia). The admissible profit margins will be calculated as a percentage of their “total cost of...
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Fix the flaws in fertiliser taxation
When the government spends heavily from its budget to make fertilisers available to farmers at a fraction of their cost, it seems senseless to tax them or the RMs used for making them. The Standing Committee on Chemicals and Fertilisers has recommended that the Centre propose to the GST Council to reduce tax rates on fertilisers from the current 5%. It has also sought a reduction in GST on raw materials (RMs) used in the making of fertilizers. Currently, RMs such as sulfuric acid and ammonia are levied 18% GST, while phosphoric acid attracts 12%. The present structure of taxing fertilisers and RMs used for making them has three major flaws. 1. To make fertilisers affordable to farmers, the government...
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Rationalise taxes on fertilisers
The cost of making fertilisers available to farmers by itself is substantially higher than the price the Govt wants them to pay, ideally, it should not levy any tax In its report laid in Parliament on August 9, 2023, the Standing Committee on Chemicals and Fertilizers has recommended that the Union Government should propose to the GST Council to reduce tax rates on fertilizers from the current 5 per cent. Initially, fertilizers were placed under the 12 per cent slab. However, following representation made by various states, the tax rate was reduced to 5 per cent. Now, the Committee wants this to be reduced further. It has also asked the Government to “consider favourably the proposal to lower GST on...
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Self-reliance in fertilisers
Potash (K), and phosphate (P) are among the three major plant nutrients (the third being nitrogen or ‘N’) needed for increasing the production of foodgrains and other agricultural products. Their requirements are met mostly from imports. A farmer sprinkles fertiliser on paddy crop in Koppal district. The enactment of two laws, viz. the Mines and Minerals (Development and Regulation) Amendment Act, 2023, and the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023, in the monsoon session of Parliament bodes well for the Indian fertiliser sector. While the first law paves the way for the auction of critical minerals such as potash and phosphate blocks for exploration and processing in India, the second law provides a fixed 50-year production lease for offshore minerals....
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‘Indigenous’ fertilisers must be explored
The government must pursue indigenous sources of fertiliser raw materials to minimise India’s vulnerabilities on imports The enactment of two laws viz. The Mines and Minerals (Development and Regulation) Amendment Act, 2023 and the Offshore Areas Mineral (Development and Regulation) Amendment Act, 2023 in the just concluded monsoon session of the parliament bodes well for the Indian fertilizer sector. While the first law paves the way for the auction of critical mineral potash (besides lithium and graphite) blocks for exploration and processing in India, the second provides a fixed 50-year production lease for offshore minerals. Potash or ‘K’ is amongst the three major plant nutrients (the other two being Nitrogen or ‘N’ and Phosphate or ‘P’) needed for increasing production...
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The success of PM PRANAM depends on reducing urea usage by farmers
The government has rightly emphasised the need for shifting away from chemical fertilisers, reducing imbalance in nutrient use and rejuvenating the soil. But this won’t be possible till the existing policy framework is changed The announcements on urea perpetuate their use by emphatically stating that the extant pricing and subsidy policies will continue. The Union government made three major policy announcements on June 28, 2023 — continuation of the urea subsidy scheme up to 2025-26 with an outlay of Rs 3.68 lakh crore, continued availability of urea to the farmers at the maximum retail price of Rs 242 per 45 kg bag and a new scheme PM-PRANAM (PM programme for restoration, awareness, nourishment and amelioration of mother earth). The first...
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Fertiliser subsidies are not the solution
Instead of pumping more subsidies the Government should push for nano fertilisers which are efficient and cost-effective The Union Minister of Health and Family Welfare and Chemicals and Fertilizers Mansukh Mandaviya has stated that during 2023-24, around Rs 46,000 crore would be needed for fertilizer subsidy payments over and above Rs 175,000 crore being the budget estimate (BE) given by the Finance Minister Nirmala Sitharaman in the budget presented on February 1, 2023. On the other hand, the Ministry of Finance (MoF) feels, payments could be even less than BE. Fertilizer subsidy is payments made to manufacturers or importers to cover the excess of the cost of production/import and distribution (or cost of supply) over a low maximum retail price...
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Can Nano propel fertiliser reforms?
In this backdrop, let us look at the long-pending reform that was recommended by several committees in the past Successive governments have not initiated meaningful reforms in the fertiliser sector due to the significant gap between the cost of fertilisers and the price paid by farmers. Consider this: Currently, the cost of supplying a 45 kg bag of urea, the most widely used nitrogen fertiliser, is Rs 2650, against only Rs 240 paid by the farmer. In the case of diammonium phosphate, or DAP, the cost of a 50 kg bag is Rs 4000, against Rs 1350 paid by farmers. The excess cost over the price of Rs 2410 in the case of urea and Rs 2650 for DAP is paid...
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Nano fertilisers can reduce subsidies
Nano fertilisers can yield better results but they can’t perform miracles. For a substantial reduction in subsidy, the Govt must implement agri reforms On April 26, 2023, Union Minister for Home and Cooperatives Amit Shah launched liquid nano-diammonium phosphate (nano-DAP) developed by the Nano Biotechnology Research Centre (NBRC) (Kalol) of Indian Farmers Fertiliser Cooperative (IFFCO). During the current fiscal, IFFCO plans to produce 50 million bottles (500 ml) of nano-DAP which will be scaled up to 180 million bottles by 2025-26. According to US Awasthi, Managing Director of IFFCO, by then imports of DAP might not be required; currently, India imports over 50 percent of its DAP requirement. Earlier, on October 17, 2022, Prime Minister Narendra Modi launched liquid nano...
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