World Trade Organisation (WTO), the primary international body to help promote free trade has questioned India for providing subsidy on only indigenous ammonium sulphate and not on the imported fertiliser.
"WTO has asked India to furnish details as to why it has kept imported ammonium sulphate out of the ambit of Nutrient-Based Subsidy (NBS) policy," a senior Fertiliser Ministry told PTI.
The Fertiliser Ministry is still examining the points raised by WTO and will respond soon, the official said.
India is currently providing subsidy on 22 grades of phosphorous and potassium fertilisers under the NBS Policy on both indigenous and imported fertilisers.
However in the case of ammonium sulphate, the government has fixed the subsidy of Rs 5,979 per tonne for the indigenous produce only to ensure the fertiliser is available at reasonable price in the domestic market.
Ammonium sulphate is a by-product of caprolactum, a petro-chemical product used in making of nylon-6. It consists of nitrogen and sulphur and hence is important for balanced fertilisation and is considered agronomically effective.
Ammonium sulphate is manufactured by the Fertilisers and Chemicals Travancore (FACT) and Gujarat State Fertilisers and Chemicals (GSFC) with an aggregate annual production of over three lakh tonne.
"According to two PSUs -- FACT and GSFC, production cost of ammonium sulphate is higher than global prices. Without subsidy, they would run into losses," the official said.
Industry experts say that the cost of ammonium sulphate is expected to be around Rs 15,000 per tonne, while it is made available at retail price of Rs 8,000-9,000 per tonne after subsidising it.
Experts also said that many companies are not importing ammonium sulphate as they find it unviable without subsidy because global prices are ruling high at $210 per tonne.