Even after the proposed total decontrol of urea prices from April 2007, a variable import duty tariff will be needed to strike a balance between the international urea prices and the domestic cost of production.
Besides, a World Trade Organisation (WTO)-compatible protection for the domestic urea industry may be desirable since 80 per cent of the urea manufacturing units are not cost-inefficient and, as such, no burden on the society. This is needed also because of the high volatility of international urea prices.
These are the conclusions of a study of the economics of urea sector conducted by agriculture economist Brajesh Jha. He is a Reader in the Delhi-based Institute of Economic Growth.
The study points out that the import of urea cannot be opened up without checks as the domestic industry is cost-heterogeneous
