Lok Sabha Question No. 858 (UNSTARRED), answered on 2024-11-29
Subject: Increase in prices of DAP and Urea Fertilizers
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Smt. Geniben Nagaji Thakor

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS AND FERTILIZERS DEPARTMENT OF FERTILIZERS

## LOK SABHA

UNSTARRED QUESTION NO. 858 TO BE ANSWERED ON

: 29.11.2024

## Increase in prices of DAP and Urea Fertilizers

## 858. SMT. GENIBEN  NAGAJI THAKOR:

Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a) the steps taken/proposed to be taken by the Government to check the increasing prices of DAP and Urea fertilizers;
- (b) whether there is any reduction in the production of these fertilizers; and
- (c) if  so,  the  steps  taken/proposed  to  be  taken  by  the  Government  to  increase  the production of fertilizers?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF CHEMICALS & FERTILIZERS (SMT.  ANUPRIYA  PATEL)

(a): In  Phosphatic  &  Potassic  (P&K)  fertilizers,  under  Nutrient  Based  Subsidy  (NBS) scheme,  subsidy  is  fixed  keeping  in  view  international  prices  of  key  fertilizers  &  raw materials and fluctuations, if any, are subsumed while fixing NBS rates for P&K fertilizers annually  /  bi-annually.  During  Kharif  2024,  the  subsidy  per  MT  in  respect  of  DAP  was ₹21676 whereas during Rabi 2024-25, the subsidy per MT in respect of DAP has been fixed at ₹21911. In addition, in order to ensure smooth availability of DAP at affordable prices to farmers, Government has provided special packages on DAP over and above the NBS subsidy rates on need basis. In 2024-25, the Government has approved onetime special package on DAP beyond the NBS rates on actual PoS (Point of Sale) sale of DAP for the period from 01.04.2024 till 31.12.2024 @ ₹ 3500 per MT to the P&K fertilizer companies with approximate financial implication of ₹2625 crores to ensure sustainable availability of DAP at affordable prices to the farmers and support the agriculture sector and related activities and strengthen food security scenario in the country.

Urea  is  provided  to  the  farmers  at  a  statutorily  notified  Maximum  Retail  Price (MRP) irrespective of the cost of production. The subsidized MRP of 45 kg bag of urea is Rs.242 per bag (exclusive of charges towards neem coating and taxes applicable). The difference between the delivered cost of urea at farm gate and net market realization by the urea units is given as subsidy to the urea manufacturer/importer by the Government of India. Accordingly, all farmers are being supplied urea at the subsidized rates.

(b) & (c): With  regard  to  Urea,  the  Government  had  announced  New  Investment Policy  (NIP)  -  2012  on  2 nd January  2013  and  its  amendment  on  7 th October,  2014  to facilitate fresh investment in the urea sector and to make India self-sufficient in the urea sector. Total 6 new urea units have been set up under NIP-2012 which includes 4 urea units set up through Joint Venture Companies (JVC) of nominated PSUs and 2 urea units set up by the private companies. The units set up through JVC are Ramagundam urea unit of Ramagundam Fertilizers and Chemicals Ltd (RFCL) in Telangana and 3 urea units namely Gorakhpur, Sindri and Barauni of Hindustan Urvarak & Rasayan Limited (HURL) in  Uttar  Pradesh,  Jharkhand  and  Bihar,  respectively.  The  units  set  up  by  private companies are Panagarh urea unit of Matix Fertilizers and Chemicals Ltd. (Matix) in West Bengal; and Gadepan-III urea unit of Chambal Fertilizers and Chemicals Ltd. (CFCL) in Rajasthan.  Each  of  these  units  has  installed  capacity  of  12.7  Lakh  Metric  Tonne  per annum  (LMTPA).  These  units  are  highly  energy  efficient  as  they  are  based  on  latest technology. Therefore, these units have together added urea production capacity of 76.2 LMTPA thereby total indigenous urea production capacity (Reassessed Capacity, RAC) has increased from 207.54 LMTPA during 2014-15 to 283.74 LMTPA at present. Further, an exclusive policy for the revival of Talcher unit of FCIL through JVC of nominated PSUs namely Talcher Fertilizers Limited (TFL) by setting up a new Greenfield urea plant of 12.7 LMTPA at coal gasification route has also been approved.

In addition, the Government also notified the New Urea Policy (NUP) - 2015 on 25 th May,  2015  for  the  existing  25  gas-based  urea  units  with  one  of  the  objectives  of maximizing indigenous urea production. The NUP-2015 has led to additional production of urea by 20-25 LMTPA as compared to the production during 2014-15. These steps have facilitated increase in Urea production from 225 LMT per annum during 2014-15 to 314.07 LMT during 2023-24.

In  case  of  Phosphatic  &  Potassic  fertilizers  (P&K),  the  companies  are  free  to import /produce fertilizer raw materials, intermediaries and finished fertilizers as per their business dynamics. Based on the requests, the new manufacturing units or increase in manufacturing capacity of existing units have been recognized / taken on record under the  NBS  subsidy  scheme,  with  a  view  to boost  manufacturing  and  make  country  selfreliant in fertilizer production. Further, to promote Potash derived from Molasses (PDM) which is  100% indigenously manufactured fertilizer,  it  has  been  notified  under  Nutrient based subsidy (NBS) regime w.e.f 13.10.2021. Also, freight Subsidy on SSP, which is an indigenously manufactured fertilizer, has been made applicable since Kharif 2022 to help in  promotion  of  SSP  usage  for  providing  Phosphatic  or  'P'  nutrient  to  the  soil.  These steps have facilitated increase in production of P&K fertilizers from 159.54 LMT in 201415 to 182.85 LMT in 2023-24.

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