Confident of India becoming net exporter of urea in few years: Fertiliser Minister

Looking for a better year ahead, Fertiliser Minister Ananth Kumar has said that he is confident of making India a net exporter of urea in the coming years. 

The fertiliser sector expects the output to rise by over two million tonnes in 2016, which can help lessen the dependence on imports and also lower subsidies by up to Rs 10,000 crore.

In 2015, major initiatives in the fertiliser space included mandatory neem-coating of urea and a revival of closed plants to make the country self-sufficient in urea production.

However, huge subsidy arrears, which may touch Rs 45,000 crore by March 2016, remain a big concern.

The government this year also announced the new urea policy and gas pooling to make the sector energy-efficient and smoothen the process of gas availability and supply.

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"During the year, we decided for mandatory neem-coating of the total 100% urea produced in the country or imported. And we achieved it in a record time of 166 days. It is a silent urea revolution, which has created a win-win situation for the farmers and for the health of soil," Fertiliser Minister Ananth Kumar told PTI.

He further said that the government has introduced the new urea policy this year, which incentivises the energy efficiency in the sector and will help boost urea production.

"The government has already started the process of revival of the closed urea plants and to establish new urea plants, which will transform India from net importer of urea to its net exporter in coming years," the minister said.

Fertiliser Secretary Anuj Kumar Bishnoi said the country's "urea production could reach record 25 million tonnes in the next financial year."

"At the same time, imports could also come down by 1.5 to 2 million tonnes with the help of policy initiatives like neem-coating of urea and new urea policy," Bishnoi added.

With these initiatives, Bishnoi said the fertiliser subsidy bill can come down by Rs 5,000-10,000 crore.

India produces about 22 million tonnes of urea annually but has to import 7-8 million tonnes a year to meet the domestic demand.

The government has fixed the maximum retail price (MRP) of urea at Rs 5,360 per tonne and the difference between the cost of production and the MRP is reimbursed to the manufacturers. In the case of urea, the subsidy constitutes more than 75% of the cost of production. 

To give a boost to the controlled-urea sector, the government in May decided to make it mandatory for all the indigenous producers of urea to produce 100% of their total production of urea as neem-coated urea.

The move, which could result in subsidy savings of Rs 6,000 crore annually, was aimed at  curbing  illegal diversion of highly subsidised urea to non-agricultural use.

The year also saw the Central government approving revival of three closed urea plants and setting up of a new one at a cost of about Rs 22,500 crore. No new fertiliser plant has come up in the country in the last 15 years.

Although the government expects these decisions to have a positive impact on the fertiliser industry in long-term, the cash-starved industry is not satisfied.

"Nothing has changed. We are still there where we were and our outstandings are still increasing and can touch Rs 45,000 crore," Fertiliser Association of India (FAI) Director General Satish Chander said.

The huge subsidy arrears are affecting the cash flow of the fertiliser manufacturers.

"Reforms in fertiliser sector are  necessary for  the interest of soil health, food security, sustainability of agriculture and elimination of rural poverty," Chander said.