Budget 2013: FAI demands new investment policy for urea

NEW DELHI: New investment policy for urea sector has been pending for long time now and no investment has been made in the sector for more than one and a half decades, the Fertiliser Association of India (FAI) said in its pre-Budget memorandum.

"Last green field urea plant was set up 17 years ago in 1995 and last brown field project was commissioned in 1999. The new investment policy notified on 4th September, 2008 failed to attract major investment except small capacity addition of about 2 million tonnes through revamp of existing plants.

"Unless appropriate modifications are made in the floor and ceiling for additional production from revamp projects, and incentives for production beyond cut-off are maintained, the current additional production of about 2 million tonnes may also become unviable," it said.

FAI also asked for lending to new fertiliser projects to be allowed as part of priority sector lending by banks.

"The industry has provided all necessary inputs/suggestions for new investment policy. The Committee of Secretaries (COS) has also submitted its report. The draft new investment policy prepared by DOF is pending for approval of the CCEA. The new policy must ensure viability of the additional capacity recognising realistic project cost, reasonable level of floor & ceiling, linkage with gas price increase, allocation of domestic gas and pipeline connectivity," the industry body added.

FAI also said that urea, which represents about 50% of total consumption of fertiliser products in India, needs to be brought immediately under Nutrient Based Subsidy (NBS) Scheme.

"The stated NBS policy of the government which is applicable only on P and K fertilisers needs to be extended for urea also. The NBS scheme for urea be as recommended by the Committee of Secretaries headed by Soumitra Choudhary, Member, Planning Commission. This has become all the more desirable to maintain the ratio between MRP of urea vis-à-vis P and K fertilisers, which is essential for balanced fertilisation," it said.