India lowers subsidies on phosphates, potash fertilizers

01 May 2013 13:32  [Source: ICIS news]

LONDON (ICIS)--India has slashed the subsidy rates of phosphate and potash fertilizers, by 14% and 21.5% respectively, for the current fiscal year, April 2013 to March 2014, the government said on Wednesday.

The total subsidy for phosphate and potash fertilizers in the current year is estimated to decline by 15% to around Indian rupee (Rs) 260-275bn. This reduction in subsidies is expected to save the exchequer around Rs50bn ($933m, €705m).

Under the nutrient-based scheme (NBS), the subsidy on diammonium phosphate (DAP) has been reduced to Rs12,350/tonne, down by Rs2,000/tonne compared with the last financial year. The potash subsidy is now Rs11,300/tonne, down Rs3,100/tonne in the last year.

Nutrient based subsidy (2013-14)










The subsidy rates will be implemented retrospectively from 1 April, which is the start of the financial year.

The maximum retail price (MRP) of DAP and muriate of potash (MOP) is also expected to decline, because international prices have weakened during the last few months. The MRP for DAP is likely to be reduced by Rs1,500/tonne from Rs24,000/tonne at present and by Rs1,000/tonne for MOP compared with Rs16,800/tonne at present.

A formal notification from the Department of Fertilizers is expected in the next few days.

The subsidy announcement has been delayed by more than a month because of political reasons including the resignation of the fertilizer minister, MK Alagiri, in March.

Under the country's new Budget, which was announced on 28 February, the total fertilizer subsidy is estimated at Rs659.72bn, largely unchanged from a revised estimate of Rs659.74bn in the previous financial year.

Under the NBS, which was introduced on 1 April 2010, the maximum retail price of 22 varieties of phosphate and potash fertilizers has been partially freed up, but the government reimburses companies the difference in the cost of selling these fertilizers at a lower price to farmers.

(€1 = Rs70.9, $1 = Rs53.6)

By: Deepika Thapliyal
+44 208 652 3214

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