Officials said as per the policy, companies could be given a subsidy to manufacture organic manure from compost with an initial target to produce around 1 million tonnes of the same.
Though, a very small fraction of India's total domestic urea demand of around 35 million tonnes, but production of 1 million tonnes of organic manure from city and municipal waste could lower reliance on imports in the long run. India imports around 8-9 million tonnes of urea annually to meet its domestic demand.
More From This Section
Currently, a very small amount of urban waste is turned into manure, mostly by localised units that lack scale.
Chemicals and Fertiliser Minister Ananth Kumar in a session on AMRUT (Atal Mission for Rejuvenation and Urban Transformation), which was part of programme launched by Prime Minister Narendra Modi on urban development, too, hinted at the possibility of such a scheme which would subsidise conversion of urban city waste to compost.
India produces around 62 million tonnes of urban waste annually, but most of it is not recycled.
The relentless use of chemical fertiliser lowers the fertility of soil and the response time of such also goes down over time. Moreover, organic manure can help in increasing the yield by 10 per cent, studies have shown.
" The Centre is willing to provide grants which are interested in processing the waste into manure and also provide viability gap funding if needed for the same," Chemicals and Fertiliser Minister Ananth Kumar had said.
Officials said as part of the scheme, domestic fertilizer companies can also be encouraged to form joint ventures (JVs) with others to manufacture organic manure from city waste.
The basic problem in increasing acceptability of organic manure is its prohibitive cost, which shuns prospective buyers. Organic manure costs around Rs 7,000 per tonne, while the price of urea is around Rs 5,500 per tonne, so unless the sale price of organic manure is brought below that of urea, acceptability and use of organic manure will remain limited to few segments.
"To promote production and use of organic manure, its cost has to be less than that of urea, for which a subsidy of minimum Rs 1,500 per tonne will have to given by the Centre," another official said. He said the finance ministry has been approached for this, which could take a call on the same soon.
"It is a good initiative and something on these lines is being thought for Delhi as well, but unless something is done on subsidy, cost benefit is not there," Rakesh Kapur, chairman of Fertiliser Association of India told Business Standard. He said if manure made from municipal waste is sold below Rs 3,500 per tonne, then on it becomes viable, for which government should at least give a subsidy of Rs 2,500 per quintal. The expenditure on providing a subsidy of Rs 2,500 per tonne is estimated to be around Rs 6,000 crore.
In May, the Union Cabinet approved a new policy on urea to incentive domestic manufacturers and freed transportation of P & K fertilisers.
It has also linked the incentive given to domestic manufacturers with their annual energy consumption to lower carbon footprint. The urea policy will be in force for next four financial years starting from 2015-16.
The new urea policy was aimed at increasing annual production by 2 million tonnes, and lowers the annual subsidy by Rs 4,800 crore, of which Rs 2,618 crore would be saved directly.
The Planning Commission had estimated India needed to invest at least Rs 40,000 crore at current capital cost to raise urea capacity by about 12 mt. The total investment in the entire fertiliser sector, including urea, was Rs 27,247 crore at the end of 2010-11.