The fertiliser industry is keenly awaiting the new policy on urea which is expected to reduce the dependence on imports, Tata Chemicals said today.
"New policy seems to be on agenda of the government, and we hope it will be announced at the earliest, as this is a measure to reduce dependence on urea imports," Tata Chemicals Managing Director R Mukundan said.
A Group of Ministers (GoM), last month, approved a new urea investment policy that promises incentives on natural gas price to fertiliser companies for reviving, expanding and setting up of new plants, to boost domestic production.
India's production of urea at 22 million tonne is about 5 million tonne short of demand, requiring imports. The Union Budget stresses attaining self-sufficiency over next five years, which is a welcome step, Mukundan said.
Import of equipment for urea projects has been fully exempted from basic customs duty of 5% for 3 years. This, plus abolition of customs duty on coal for next 2 years will have positive impact on raw material costs, he said.
The Budget for 2012-13 has provided tax incentives on external commercial borrowings (ECB) and capital expenditure on fertiliser front. The investment-linked deduction of capital expenditure incurred in the sector would be provided at 150% against the current rate of 100%.
The Budget could have addressed the issue of rising disparity between urea and non-urea fertilisers, Mukundan said, adding that no issuance of fertiliser bonds for subsidy payments is a forward-looking step.
