The fertiliser industry has welcomed the Tariff Commission’s recommendation seeking interest payment on delayed release of subsidy by the government to fertiliser manufacturers. At present, the companies have to wait years for the release of subsidy, given that the last four years have seen huge subsidy carryovers. The Fertiliser Association of India (FAI) has submitted its suggestions on the commission’s recommendations to department of fertiliser (DoF). “The department is now in the process of going through all the recommendations as well as industry suggestions and drafting the changes based on these,” a DoF official said. The Tariff Commission submitted its recommendations to DoF in December last year.Apart from the recommendation to pay interest on delayed subsidies, the commission has also suggested a crucial change in the price adjustment formula. It has devised a price adjustment formula based not on only raw materials, as was done earlier, but also freight charges. This is to ensure that any changes in freight prices will also be accounted for while calculating the cost of production of fertilisers for the current period. Further, the commission has, for the first time, recognised sulphur as a nutrient in fertilisers. Thus, all fertilisers, which have so far been mentioned as set of three nutrients (nitrogen, phosphorous and potassium), will now see a mention of sulphur as well. The commission has also been recommending four groups of the ‘N’ nutrient, namely, natural gas, naptha, imported ammonia and urea.“We have given our observations to DoF,” an FAI official said. “We are happy with most of the recommendations and our suggestions are mostly to the effect of fine-tuning some calculations. Apart from minor changes, one suggestion is to waive off import duty on phosphoric fertilisers in order to encourage its manufacturing in India.”Meanwhile, senior DoF officials believe that any costing method needs to provide a mechanism wherein the government’s subsidy burden gets reduced while ensuring that the manufacture and hence, availability, of fertilisers does not get discouraged. “This is the dilemma we need to deal with and accordingly, devise a costing framework, which is what these Tariff Commissions strive to achieve,” the official said.
