New Delhi: The Cabinet Committee on Economic Affairs is likely to discuss a new policy for phosphorus and potash this week to encourage domestic manufacturers to produce more di-ammonium phosphate (DAP), a major fertilizers used by farmers.
The Ministry of Chemicals and Fertilizers has sent a note to the Cabinet Committee on Economic Affairs (CCEA) recommending international price parity for DAP production, which means that the government would calculate the cost of production taking into account the prevalent price of phosphorus in the global market.
“The Ministry has already sent the note. The CCEA may take up the issue this week,” an official source said.
Through this new policy, the government is planning to treat the indigenous DAP production at par with imported DAP by linking the prices, sources said.
The policy, if approved, would encourage the domestic manufacturers for making long-term investments in the phosphatic sector, they added.
The global price of phosphorus (P) in DAP would be taken as a base price for calculating the value of P in complex fertilizer.
DAP manufacturers in India have to rely on imported raw materials and inputs for producing the fertilizer.
The mounting subsidy bill of fertilizer, estimated to touch Rs1,00,000 crore in 2008-09 fiscal, and stagnated domestic production have made the government to initiate new policies to attract fresh investment in the sector.
The Centre has recently announced a new policy for single super phosphate (SSP) fertilizer, besides it introduced nutrient-based policy that would encourage farmers to use more of complex fertilizers than single nutrient fertilizer.
The price of complex fertiliser, which is better for the health of the soil, would come down as rate of nutrients like NPK would be calculated on the basis of their corresponding prices in single fertilizer.