Fertiliser makers demand import duty reduction on raw materials

The fertiliser sector is looking forward to some duty corrections on the import of raw materials and finished products in the forthcoming Budget 2021-22. Currently, the import duties on raw materials and finished fertiliser products are at 5 per cent.

“We want the import duties on raw materials to be reduced from the current 5 per cent to around 1 per cent. We also want the duty on imported finished fertiliser products to be increased from 5 per cent to 7.5 or 10 per cent,” said Satish Chander, Director General, Fertiliser Association of India (FAI), the apex trade body.

The FAI said that correction in duty structure would give a boost to domestic manufacturing. The industry, for manufacturing the phoshporous (P) and potassium (K) fertilisers in the country, depends on imported raw materials such as rock phoshpate, sulphur, phosphoric acid and ammonia.

Raw materials

“These raw materials are 100 per cent imported. Reducing duty on raw materials would help the domestic manufacturers to improve their capacity utilisation, which currently stands at around 70 per cent. If this duty structure is corrected, we can produce more,” Chander said. The International Zinc Association (IZA) suggested that the GST rates on micronutrients such as zinc and boron, which is currently at 12 per cent or more, should be kept at par with the bulk fertilisers at 5 per cent.

“The high GST rates is discouraging the farmers to use micronutrient fertilizers,” said Soumitra Das, Director, South Asia, Zinc Nutrient Initiative, IZA.

“The inclusion of urea under the Nutrient Based Subisdy scheme will encourage the farmers to practice balanced fertiliser use. Also the Direct benefit transfer (DBT) / Direct cash transfer (DCT) should be provided to the farmers, so that they can take appropriate decisions on what farm inputs to purchase rather than be influenced by highly-subsidised products like urea,” said Das.

Sandeepa Kanitkar, Chairperson and MD, Kan Biosys Pvt Ltd, said that the government should look at encouraging chemical fertiliser companies to incorporate the biologics with every bag of fertiliser or coat them with compatible biologics.

The government should look at reducing the GST on bio-pesticides from 18 per cent to 5 per cent and encourage the ‘Make in India’ initiative for biologicals by allocating ₹2,000 crore for frontline demonstrations in every Sstate. The government should also encourage export of biologics through tax incentives, said Kanitkar.