Lok Sabha Question No. 318 (STARRED), answered on 2017-08-08
Subject: Domestic Production of Fertilizers
Ministry: CHEMICALS AND FERTILIZERS
Asked by: ELUMALAI VELLAIGOUNDER

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS

## DEPARTMENT OF FERTILISERS

## LOK SABHA

STARRED QUESTION NO . 318*

TO BE ANSWERED ON:

08.08.2017

## DOMESTIC PRODUTION OF FERTILIZERS

## *318 SHRI V. ELUMALAI:

Will the Minister of CHEMICALS & FERTILIZERS be pleased to state:-

- (a) whether  the  overall  domestic  output/  production  of  fertilizers  has  risen  in  the country during the last three years and if so, the details thereof;
- (b) whether import of fertilizer has also declined during the said period and if so, the details thereof;
- (c) whether the Government has introduced reforms from time to time to expedite the pace of production of fertilizers in the country and if so, the details thereof; and
- (d) whether the Government has given any incentive for increasing production of fertilizers in the country and if so, the details thereof?

## ANSWER

MINISTER OF CHEMICALS & FERTILIZERS AND PARLIAMENTRY AFFAIRS

(SHRI ANANTH KUMAR)

(a) to (d): A Statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO PART (a) to (d) OF THE LOK SABHA STARRED  QUESTION  NO.  318*  FOR  REPLY  ON  08.08.2017  REGARDING DOMESTIC PRODUTION OF FERTILIZERS.

(a) :    Yes Madam, The  overall domestic output/ production of fertilizers has risen in the country during the last three years, these are  given below :-

(Figure in 'LMT')

| Year    |   Production |
|---------|--------------|
| 2014-15 |       385.39 |
| 2015-16 |       413.14 |
| 2016-17 |       413.99 |

(b) :   Urea is the only fertilizer under statutory price control and its import is restricted and permitted through State Trading Enterprises ( STEs), namely Metals and Mineral Trading Corporation of India ( MMTC), State Trading Corporation Limited ( STC) and Indian Potash Limited (IPL), under the Foreign Trade Policy of the Government. Urea for  direct  agricultural  use  is  imported  on  Government  account  to  bridge  the  gap between assessed demand and indigenous production . Government is also importing approximately  20  lakh  Metric  Tonnes  urea  from  Oman  India  Fertilizer  Company  ( OMIFCO)  under  Long  Term  Urea  Off  Take  Agreement  (  UOTA)  between  GOI  & OIMIFCO.

Import  of  fertilizers  (  other  than  Urea)  is  free,  commonly  known  as  Open  General License  (OGL).  Various  companies  import  these  fertilizers  as  per  their  commercial judgement. Muriate of Potash (MOP) is the only fertilizer, demand  for which  is  fully met  through  imports  as  there  are  no  viable  sources  of  MOP  in  the  country.  The production and import of fertilizers in comparison to last three years is as below:

<Figures in LMT >

| Year    | Urea   | Urea   | DAP    | DAP   | NPK    | NPK   | MOP#   |
|---------|--------|--------|--------|-------|--------|-------|--------|
| Year    | Import | Prod.  | Import | Prod. | Import | Prod. | Import |
| 2014-15 | 87.49  | 225.85 | 38.53  | 34.44 | 2.91   | 78.32 | 41.97  |
| 2015-16 | 84.74  | 244.75 | 60.08  | 37.87 | 6.29   | 83.01 | 32.43  |
| 2016-17 | 54.81  | 242.01 | 43.85  | 43.65 | 5.21   | 79.49 | 37.36  |

# MOP includes industrial and agriculture uses.

(c) : Yes, Madam. The Government of India has notified the New Urea Policy ( NUP)2015 on 25 th May,  2015  for  existing  25  gas  based  urea  units  with  the  objectives  of maximizing indigenous urea production; promoting energy efficiency in urea production; and rationalizing subsidy burden on the government. NUP-2015 has led to additional  production  of  approximately  20  LMT  as  compared  to  2014-15,  from  the existing gas based urea plants and the total production of urea during the year 201516  was  244.75  LMT,  i.e.  the  highest  ever  urea  production  in  the  country.  The indigenous urea production for 2016-17 was 242.01 LMT.

The Government has notified New Investment Policy-2012 on 2 nd January, 2013 and its amendment on 7 th October 2014 to facilitate fresh investment in urea sector and to make  India  self-sufficient  in  the  urea  sector.  Based  on  NIP-2012,  any  interested company can establish urea plants in the country. At present, Department of Fertilizers has 2 active proposals, i.e. Matix Fertilizers & Chemicals Limited ((Greenfield project at Panagarh, West Bengal) and Chambal Fertilizers & Chemicals Limited ( Brownfield project at Gadepan, Rajasthan) for setting up of urea projects.

P&K  Fertilizers  are  decontrolled,  the  Department  of  Fertilizers  does  not  interfere directly in the production affairs of the P&K fertilizers companies in the country.

]

(d)  :      Yes,  Madam.  As  per  para  5  of  the  New  Urea  Policy  -2015  dated,  2015,  for production  of urea beyond RAC, the units are entitled for their respective variable cost and a uniform per MT incentive equal to the lowest of the per MT fixed costs of all the indigenous  urea  units  subject  to  import  parity  price  plus  weighted  average  of  other incidental  charges  which  the  government  incurs  on  the  imported  urea.    A  further amendment was incorporated for production of urea beyond RAC during 2016-17 such that  units  were  entitled  for  their  respective  variable  cost  and  a  uniform  per  MT incentive  equal  to  the  lowest  of  the  per  MT  fixed  cost  of  all  indigenous  urea  units subject to sum of import parity price, other incidental changes which the Government incurs  in  the  import  of  urea  and  weighted  average  of  Central  Government  levies  of urea paid by the urea manufacturing units.

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