Facing margin squeeze as the rupee continued to depreciate against the dollar, the fertiliser industry has asked the international suppliers to bring down prices of of the product they export to India.
U S Awasthi, managing director Indian Farmers Fertiliser Cooperative Limited (IIFCO), said on Tuesday that the industry has — given the “unpredecented situation” — asked the suppliers to consider their demands at the earliest.
“We have sought the lowering of import prices of DAP (Di Ammonium Phosphate), NPK Complexes and MoP (Muriate of Potash) by $50, $45 and $36 respectively. They are seriously considering our demands,” he told Business Standard.
Currently, India imports DAP at $ 677 and MoP at $ 490 per tonne from the international suppliers.
“The exchange rate has made our imports is very costlier,” said Aswathi. “So, any further depreciation in the rupee would prove counter-productive for us.”
As the country’s largest fertiliser manufacturer and distributor, IIFCO had raised the prices of DAP fertilisers in this financial year from Rs 12,000 per tonne to Rs 18,100 — as the rupee went from Rs 44 to Rs 49 per dollar.
“We witnessed demand destruction in the meantime,” he recalled. “The farmers are unable to bear this rise. The companies cannot absorb the prices if fertilisers prices are not increased further.”
Analysts fear that the Indian industry may incur heavy loss if the situation persists and it the fertiliser suppliers do not agree to the Indian demands. The Fertiliser Association of India noted that every 10 paisa depreciation of the rupee translates into a Rs 75 per tonne of price rise for DAP. “We have three ways,” points out its director-general Satish Chander.
“One is to raise the prices; that we are unwilling to do. Second is to ask the government for subsidy. That, again, we don’t want to do. Third is to ask the suppliers to reduce the prices — that is what we are doing.”
He also said that India was a fertiliser-deficient country and hence “cannot think” of an import holiday.
The fertiliser prices have drastically gone up in the last one year, taking the prices of deregulated fertilisers to as high as over 100 per cent in the case of DAP and over 60 per cent for MoP. India’s DAP, MoP and NPK Complex requirement is highly dependent on imports.
