GoM to consider partially freeing urea prices on Monday

GoM to consider partially freeing urea prices on Monday

New Delhi: A Group of Ministers will meet next Monday to consider partially freeing urea prices with the aim of attracting fresh investment in the fertiliser sector.

“The GoM, headed by finance minister Pranab Mukherjee, will consider freeing the price of urea at the 23 November meeting," a source in the fertiliser ministry told PTI.

As urea is the fertiliser most widely used by Indian farmers, the UPA-led government intends to free the price in a “calibrated" way, without going for total decontrol at one go, the source said.

However, the government will fix a price band for urea and allow the domestic industry and importers to sell the fertiliser within the band, which is likely to be anything between 2-5% more than the current price of Rs5,310 per tonne.

The government had earlier decontrolled phosphatic and potassic fertiliser prices, allowing importers and manufacturers to fix the maximum retail price (MRP) under the Nutrient Based Subsidy (NBS) regime with effect from 1 April.

However, it kept the price and movement of urea under its control and fixed the MRP at Rs5,310 per tonne. As a result, the sector did not see much new investment.

“The proposed move of decontrolling the urea price is in sync with the other fertilisers. Since the sector has not seen much fresh investment, the proposal, if implemented, is likely to give a much-needed boost to the sector," the official said.

The GoM is also likely to relax restrictions on the import of urea to meet domestic need, which currently stands at about 27 million tonnes per annum. India needs to import around 5 million tonnes of urea a year to meet domestic demand.