Urea prices may see an upward revision on lower provision for fertiliser subsidies.
The fertiliser subsidy for 2012-13 has been pegged at Rs 60,974 crore, down from Rs 67,199 crore in the current fiscal.
“The lower subsidy provision might result in higher urea prices. The hike in urea prices is long overdue,” said Dr U.S. Awasthi, Managing Director of the Indian Farmers Fertiliser Co-operative Ltd (IFFCO), the country's largest fertiliser maker.
Urea prices, controlled by the Government, were last revised by about Rs 500 a tonne in 2010-11. Currently, urea is priced at Rs 5,800 a tonne.
“If the Government does not go ahead with reforms in urea pricing, there is a possibility that it may increase prices by about 10 per cent going ahead,” an official of large fertiliser maker said.
Shares of fertiliser companies such as Zuari Industries Ltd, Chambal Fertilisers and Deepak Fertilisers ended lower on the BSE, while that of Coromandel International and United Phosphorous gained marginally.
Further, the exemption of basic customs duty on import of equipment, will help modernise existing plants, said Mr Awasthi. On the new urea investment policy, Dr Awasthi said: “It all depends on how the gas will be allocated”.
The duty exemption will bring down the capital costs to that extent, Dr Satish Chandra, Director-General of Fertiliser Association of India. However, the industry was looking forward to reforms in the urea pricing.
The Government should have introduced reforms in urea, on the lines of Nutrient Based Subsidy for phosphatic and potassic fertiliser. Such reforms could have saved the subsidy outgo for the Government, besides being helpful to farmers in terms of balanced fertigation and maintain soil health, Dr Chandra said.