The group-based concession scheme for urea will come into force from April 1. It will replace the retention price scheme, which had been in place since November 1977.
The government is expecting the new pricing policy for urea units to boost production, encourage internationally competitive production practices in the urea industry, substantially reduce the burden of the urea subsidy by about
Rs 650 crore a year in the first phase itself and promote greater transparency.
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A statement issued by the ministry of chemicals and fertilisers also underlined the need to de-control the distribution and movement of urea.
Therefore, under the new policy, the movement and distribution of 25 per cent of urea has been decontrolled for the ensuing kharif season.
The new scheme has also removed the fetters on urea manufacturing units on the sale of their by-products, thereby increasing their profitability.
From April 1, urea companies will also enjoy the benefits of cutting down the cost of production, improving production efficiencies and adopting the best practices in the industry.