After the Cabinet Committee on Economic Affairs (CCEA) deferred a decision on the New Investment Policy for urea, the fertiliser industry has said the new policy will be crucial in meeting a gap of domestic urea production and its demand.
Addressing a press conference to announce the annual conference of the Fertiliser Association of India (FAI) last night, association chairman and CMD of Rashtriya Chemicals and Fertlisers (RCF), RG Rajan, said the urea policy is expected to be in place soon and investments to set up close to 8 million tonnes capacity are lined up.
The policy was approved by the Group of Ministers in February. However, the industry gave a cold response that time saying that the cap on gas price of $14 per mmbtu for urea plants was not making capacity expansion more attractive. Rajan said that appropriate changes have been incorporated in the policy now. The fertiliser ministry also expects the new urea investment policy to attract an investment of about Rs 35,000 crore to increase domestic production by 8 million tonnes.
In 2008 also, the government had announced a 'New Investment Policy' to boost urea production, but the scheme failed to attract fresh investment in the sector.
India faces shortage of close to 10 million tonnes of urea, which is met through imports. Of the total urea consumption of over 30 million tonnes in the country, 22 million tonnes is domestically produced, while the rest is imported. In the proposed new investment policy, the ministry has recommended giving 12-20 per cent post-tax return on fresh capital infused by the manufacturers for setting up of new plants, expansion and revamp of existing ones.
