Govt unveils nutrient based subsidy for fertilizer sector

The Cabinet approved to implement the Nutrient Based Subsidy (NBS) Policy on decontrolled Phosphatic and Potassic fertilizer with effect from April 1, 2010. It has been decided to fix the subsidy on the nutrients ‘N’ - Nitrogen, ‘P’ - Phosphorus, ‘K’ - Potash and ‘S’ – Sulphur contents for the year 2010-11. In addition to the fixed subsidy on above mentioned nutrients, there will be an additional per tonne subsidy for subsidized fertilizer carrying other secondary nutrients and micro nutrients in formulations approved under FCO 1985. The subsidy will continue to be disbursed through the Industry during the first phase. The industry will receive subsidy based on certification of sale by the State Governments / Statutory Auditors of the Company as in the past.

The NBS regime is expected to promote balanced fertilization and consequently increase agriculture productivity in the country through higher usage of secondary and micro nutrients. It is also expected that new innovative fertilizer products would be developed subsequently under the NBS regime to meet the different requirements of Indian agriculture. The NBS regime is expected to depict the actual demand of fertilizers in the country and promote realistic pricing of fertilizer products in the international market. Unshackling of fertilizer industry is also expected to attract fresh investments in this sector.

Since the subsidy on the subsidised nutrients and consequently subsidized fertilizers will remain fixed, the retail prices of subsidized fertilizers at farmgate level will be decided by the Companies. The Fertilizer Industry has assured that under NBS regime, the price line around the current level would be maintained during Kharif-2010. The Government in consultation with the fertilizer industry will make interventions in such a manner that the farmgate prices of non-urea fertilizers are, as far as possible, near the current prices so that the farmers are not adversely affected.

Urea which has the maximum tonnage consumed nitrogenous fertilizers in the country will continue to be under the current MRP regime. However, it has been decided to increase the maximum retail price of urea from Rs.4830 per MT to Rs5310 per MT with effect from April 1, 2010.