The Retention Price Scheme (RPS) for fertilizer Industry was introduced and implemented w. e. f. 1st November, 1977 and was remained in force till 31st March, 2003. Retention Price Scheme (RPS) was based on unit-wise cost plus approach. Under the RPS, Retention Price was fixed for each & every urea manufacturing unit by the Department of Fertilisers, Ministry of Chemicals & Fertilisers, Govt. of India. The difference between the Retention Price of Urea and the maximum retail price of urea was paid as subsidy.
Retention Price (Rs/MT) = (CRC + Conversion Cost) +Variable Cost +Selling Expenses
Subsidy was paid on the basis of Retention Price – MRP.
Retention Price Scheme (RPS) was silent on buyback arrangement. but under Retention Price Scheme (RPS), the urea manufacturing units were entitled to the subsidy on the quantity leaving the factory gate.
The Retention Pricing Scheme was replaced by New Pricing Scheme (NPS) w.e.f. 01.04.2003.