Lok Sabha Question No. 1910 (UNSTARRED), answered on 2024-08-02
Subject: GST Charged on Fertilizers
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Shri Dhairyasheel Sambhajirao Mane, Shri Sudheer Gupta, Shri Chavan Vasantrao Balwantrao

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

## LOK SABHA

UNSTARRED QUESTION NO. 1910 TO BE ANSWERED ON : 02.08.2024

## GST CHARGED ON FERTILIZERS

1910.  SHRI DHAIRYASHEEL SAMBHAJIRAO MANE: SHRI CHAVAN VASANTRAO BALWANTRAO: SHRI SUDHEER GUPTA:

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

- (a) whether there is a large difference between GST charged on fertilizers and GST charged on raw materials used for manufacturing of fertilizers like Sulphuric Acid and Ammonia in the country;
- (b) if so, the details thereof and the reasons therefor;
- (c) whether the Standing Committee on Chemicals and Fertilizers has recommended  reduction  of  GST  on  nutrients  and  raw  materials  in  the  interest  of fertilizers manufacturing companies and farmers in the country;
- (d) if so, the details thereof and the response of Government in this regard;
- (e) whether  the  production  of  fertilizers  is  not  proportionate  to  its  demand  in  the country;
- (f) if so, the details thereof along with the steps taken/proposed to be taken by the Government to increase the production of fertilizers to meet the demand; and
- (g) whether  the  Government  proposes  to  encourage  the  use  of  bio-fertilizers considering the shortage of fertilizers in the country and if so, the details thereof?

## ANSWER

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

- (a) & (b):   Presently, all fertilizers attract GST at the rate of 5%.  Inputs/raw material used in manufacturing of fertilizers like  Sulphuric  Acid  and  Ammonia  attract  GST at the rate of 18%. GST exemptions and rates are prescribed on the recommendations of the GST Council, which is a constitutional body comprising of representatives from States/UTs and Centre, taking into account all the relevant factors.
- (c)  &  (d): The  recommendations  of  the  Standing  Committee  on  Chemicals  and Fertilizers regarding reduction of GST on micronutrients and raw materials was taken to the 53 rd GST Council for consideration. The GST Council has referred the matter to GoM on Rate Rationalisation for a holistic view.
- (e)  &  (f): The data on production and demand of all fertilizers from year 2022-23 is attached at Annexure-A  and  Annexure-B, respectively.  Whenever, there is a gap between  demand  and  production  of  fertilizer,  the  same  is  met  through  import  of fertilizers.

The Government has taken following steps for making country self reliant in P&K fertilizers:

(i)    Based  on  examination  of  requests  received,  permission  are  granted  to  the fertilizer companies for increasing their manufacturing capacity which are under NBS and for induction of new P&K companies & their fertilizer products under NBS, with a view to boost manufacturing and make country self-reliant in fertilizer production.

(ii)   Potash derived from Molasses (PDM) which is 100% indigenously manufactured fertilizer  has  been  notified  under  Nutrient  based  subsidy  (NBS)  regime  w.e.f 13.10.2021.

With regards to Urea, the Government had announced New Investment Policy (NIP) 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  the  policy  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 gasbased urea units with one of the objectives of maximizing indigenous urea production beyond RAC. The NUP-2015 has led to additional production of urea by 20-25 LMTPA as compared to the production during 2014-15 annually. These steps together have facilitated increase of Urea production from level of 225 LMT per annum during 201415 to a record Urea Production at 314.09 LMT during 2023-24.

(g):      The  Government  is  recommending  soil  test  based  balanced  and  integrated nutrient management through conjunctive use of both inorganic and organic sources (manure, bio-fertilizers etc.) of plant nutrients to reduce the use of chemical fertilizers preventing deterioration of soil health, environment and contamination of groundwater. In  addition,  split  application  and  placement  of  fertilizers,  use  of  slow  releasing  N- fertilizers  and  nitrification  inhibitors,  growing  leguminous  crops  and  use  of  Resource Conservation Technologies (RCTs) are also advocated.  Indian Council of Agricultural Research imparts training, organizes front-line demonstrations and undertakes public campaigns to educate farmers on all these aspects. In order to promote use of organic sources of fertilizers, Government has developed several technologies and carried out technology dissemination activities.  Several organic waste recycling and enrichment technologies have been developed. In order to enhance bio-fertilizer use, ICAR has developed improved and efficient strains of bio-fertilizers specific to different crops and soil types. Liquid Bio-fertilizer technology  with higher shelf-life  has  also  been developed. These are available for use by farmers and other stakeholders. The ICAR also  imparts  training  to  educate  farmers  and  provide  technical  backstopping  to Governmental schemes in this regard.

The  Government  has  also  approved  Market  Development  Assistance  @ ₹1,500/MT to promote organic fertilizers, produced at plants under umbrella Galvanizing  Organic  Bio-Agro  Resources  Dhan  (GOBARdhan)  initiative covering different Biogas/CBG support schemes/programmes of stakeholder Ministries/Departments such as Sustainable Alternative Towards Affordable Transportation (SATAT) scheme of Ministry of Petroleum & Natural Gas (MoP&NG), 'Waste  to  Energy'  programme  of  Ministry  of  New  &  Renewable  Energy  (MNRE), Swachh  Bharat  Mission  (Grameen)  of  Department  of  Drinking  Water  &  Sanitation (DDWS),  etc.  Also,  for  promotion  of  organic  and  bio-fertilizers,  Government  has requested  all  fertilizer  marketing  companies  to  arrange  for  mandatory  off-take  of Fermented  Organic  Manure  (FOM)  and  other  organic  &  bio-fertilizer  with  chemical fertilizer as a 'Basket Approach'  to ensure balanced and  Integrated Nutrient Management for the Crops.

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## Annexure-A

Annexure referred to in reply to part (e) and (f) of Lok Sabha Unstarred Question

No. 1910 for answer  on 02.08.2024

## YEAR-WISE PRODUCTION OF ALL FERTILIZERS

| Production LMT)          | Production LMT)   | Production LMT)   | Production LMT)   | Production LMT)   | (Fig. in   | (Fig. in   | (Fig. in          |
|--------------------------|-------------------|-------------------|-------------------|-------------------|------------|------------|-------------------|
| YEAR                     | Urea              | A/S               | DAP               | Complex           | SSP        | TSP        | Total Fertilizers |
| 2022-23                  | 284.94            | 7.45              | 43.47             | 92.95             | 56.44      | 0.04       | 485.29            |
| 2023-24                  | 314.07            | 6.37              | 42.93             | 95.48             | 44.44      | 0.04       | 503.35            |
| 2024-25 (upto June 2024) | 75.62             | 1.44              | 10.00             | 25.16             | 13.09      | 0.00       | 125.31            |

## Annexure- B

Annexure referred to in reply to part (e) and (f) of Lok Sabha Unstarred Question No. 1910 for answer on 02.08.2024

| DEMANDS FROM ALL ACROSS INDIA 2022-23 TO 2023-24 & KHARIF 2024 (UPTO JUNE 24) (in LMT)   | DEMANDS FROM ALL ACROSS INDIA 2022-23 TO 2023-24 & KHARIF 2024 (UPTO JUNE 24) (in LMT)   | DEMANDS FROM ALL ACROSS INDIA 2022-23 TO 2023-24 & KHARIF 2024 (UPTO JUNE 24) (in LMT)   | DEMANDS FROM ALL ACROSS INDIA 2022-23 TO 2023-24 & KHARIF 2024 (UPTO JUNE 24) (in LMT)   | DEMANDS FROM ALL ACROSS INDIA 2022-23 TO 2023-24 & KHARIF 2024 (UPTO JUNE 24) (in LMT)   |
|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|
| Sl No.                                                                                   | Fertilizer                                                                               | 2022-23                                                                                  | 2023-24                                                                                  | 2024-25 (Up to June, 2024)                                                               |
| 1                                                                                        | UREA                                                                                     | 359.19                                                                                   | 356.08                                                                                   | 78.06                                                                                    |
| 2                                                                                        | DAP                                                                                      | 114.20                                                                                   | 110.18                                                                                   | 29.29                                                                                    |
| 3                                                                                        | MOP                                                                                      | 34.17                                                                                    | 27.62                                                                                    | 4.77                                                                                     |
| 4                                                                                        | NPKS                                                                                     | 120.69                                                                                   | 126.31                                                                                   | 33.01                                                                                    |

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