Cabinet may discuss change in urea subsidy

The Union Cabinet is expected to consider a change in the New Urea Policy of 2015, to enable disbursal of higher subsidy to companies which perform better, based on the import parity price (IPP).

A panel of ministers at a meeting scheduled for Friday is also expected to approve unrestricted export of all certified organic agricultural products.

On urea, officials said the import parity price is calculated on the basis of the landed price. Incidentals like customs and port loading and handling charges are not included. This sometimes leads to less disbursal of subsidy to fertiliser companies, when the landed price falls sharply in international markets. This is because the subsidy is capped up to the IPP.

If customs duty and port handling charges, estimated to be 5.65 per cent, are added to the landed price on any day for the purpose of subsidy calculation, it will lead to higher outgo for companies. The subsidy for urea is calculated on the basis of variable cost (mainly gas prices), plus ~2,300 a tonne. However, this should not be more than the prevailing IPP.

On export of organic agri produce, sources said the Centre presently allows export of organic non-basmati rice, edible oils, pulses and sugar but only up to 10,000 tonnes a year; for organic wheat, 5,000 tonnes a year. With the present government wanting to boost the production of organic crops, lifting of these quantitative restrictions would help producers and others to look for newer and lucrative markets for these products. The global organic market was estimated at $80 billion in 2014 and expected to reach $100 bn by 2020. India’s share is less than 0.5 per cent.