The present shortfall of urea in the country counts 7 million tonnes and its production needs to be ramped up sooner than later. This explains why the govt has begun reviewing its 2008 investment policy for the urea sector in a bid to fashion a new investment policy.
The demand-supply gap has chronically bedeviled the urea sector and the govt seems determined to remedy the gap. It is against the backcloth of the failure of the 2008 policy that the govt set up a Committee of secretaries to formulate a fresh investment policy on urea.
Apparently the investment capital has been shy of the urea sector and its production has failed to match the country’s needs. Efforts are being made to put up a draft policy before the cabinet that passes muster.
The new investment policy among other things provides for differential IIPs. The production from revamped projects will be provided with 85 per cent of IPP subject to floor and ceiling prices.
Presently India produces 22 million tonnes of urea while it requires 29 million tonnes. The shortfall is being met through imports.
There is gloom marking the fertliser scene in the country. The performance of the sector has left a lot to be desired.The lack of fresh and adequate investment has been mainly responsible for its present plight. Cooperative institutions such as IFFCO and KRIBHCO are producing a major share with Iffco alone accounting for more than 25 percent of production in the country.
The govt paid subsidy of about Rs 33,500 crore on PK fertlisers in 2010-11 while it intends giving nearly Rs 30 thousand crore in the current fiscal year.
According to the informed sources, if approved by the cabinet the new investment policy will effect a profound change in the urea sector.