New Delhi: The Centre has asked fertilizer firms not to lift imported nutrients, especially potash and DAP, scheduled to reach ports in February and March, due to poor demand, a move that could save up to Rs 1,000 crore in the subsidy bill of this fiscal.
In a recent order, the fertiliser ministry said that it has been decided that "di-ammonium phosphate (DAP), muriate of potash (MoP) and complex fertilisers except urea arriving during the months of February and March will not be dispatched from ports to any state till further orders".
As the government has decided to cut subsidy on these fertilisers for the next fiscal, the decision could help the department in saving up to Rs 1,000 crore in the subsidy bill of this fiscal, sources said, adding that about 4 lakh tone of nutrients are expected to reach ports in these two months.
The ministry disburses subsidy to fertiliser companies on the actual sale receipt basis. Major importers are IFFCO, PPL, Chambal Fertilisers and Indian Potash Ltd.
With government deciding to lower subsidy level for the next fiscal on these soil nutrients, sources pointed out that fertiliser firms intend to claim subsidy on the 4 lakh tones of imported quantity in the current year itself even as there is a poor demand of fertiliser at present.
The government is giving a subsidy of Rs 19,763 per tonne on DAP and Rs 16,054 a tonne on MoP in this fiscal. However, it has decided to slash the subsidy on DAP to Rs 15,263/tonne and Rs 15,000 a tonne on MoP in view of bearish global prices.
In the directive to importers, the ministry has said that fertilisers available till beginning of this month would be dispatched during February and March and asked companies to comply with this order strictly.
"The demand has come down significantly in last few months due to high prices of DAP and MoP. It is expected that there may not be any increase in demand in February and March. So, it makes no sense to allow sale of imported products in February-March," a senior fertilizer ministry official said.
The official noted that there is already a stock of 5 million tonnes of potassium and phosphatic fertilisers, which is more than sufficient to meet the demand for two months.
The subsidy bill on non-urea fertilisers is expected to increase to about Rs 70,500 crore this fiscal from about Rs 61,100 crore a year earlier.
After the decontrol of non-urea fertilisers, DAP and MoP prices have more than doubled to Rs 20,000 a tonne and Rs 12,000 a tonne, respectively.
India imports almost half of its requirement of DAP and almost entire requirement of MoP.