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Fertiliser makers seek Govt backing to acquire overseas mineral assetsqrcode

Dec. 9, 2011

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Dec. 9, 2011

Fertiliser makers have sought creation of a $20-billion sovereign fund to help support acquisition of overseas assets of minerals such as potash and phosphates.

"We want the sovereign fund to be opened up to private sector companies and the corpus increased to $20 billion,” Mr A.Vellayan, Chairman, the Fertiliser Association of India (FAI).

Such a move would not address fertiliser security but would help the Government control the bloating fertiliser subsidy besides keep a control on prices.

"China has done it and India has to go the same way as there are no quality reserves available in the country,” Mr Vellayan said. He was speaking to reporters ahead of the FAI Annual Seminar, 2011, which will focus on fertiliser reforms.

India consumed 58 million tonnes (mt) of fertilisers in 2010-11, of which 22 mt were imported, said Mr Satish Chander, Director-General, FAI. Of the 36 mt produced domestically, about 16 mt were based on imported raw materials, thereby leading to high import dependency.

Reduced usage

The scope to increase the maximum retail price of fertilisers was limited as farmers have started resisting such a move, resulting in reduced usage, Mr Vellayan said. Farmers who were blindly using some three-to-five bags of DAP per acre have now reduced their usage to two-to-three bags given the way prices have gone up.

The prices of non-urea fertilisers have shot after the Government de-control in April 2010 mainly on account of increase in global prices and a weakening rupee in the recent past.

The prices of di-ammonium Phosphate (DAP) have almost doubled from a level of Rs 9,350 a tonne in April 2010. The DAP prices, which ruled at Rs 11,000 a tonne at the beginning of kharif season in June have shot up 65 per cent to Rs 18,500 a tonne at present.

The process of de-control initiated for the non-urea fertilisers should be extended to urea also, Mr Vellayan said.

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