The government has appointed Projects Development India Ltd (PDIL) to audit single super phosphate (SSP) plants in the country to weed out spurious fertilisers from the market.
The government has also notified the quality of rock phosphate to be used in the manufacture of SSP. PDIL has been asked to audit the SSP plants every six months.
"We hope this will clear the industry of spurious manufacturers who have been getting concession (read subsidy) from the government though sale of sub-standard material," Vinod K Punshi, chairman of the SSP advisory council of the Fertiliser Association of India (FAI) and managing director of Dharamsi Morarji Chemicals, told Business Standard recently.
He said the industry had realised that a substantial quantity of spurious products was finding its way into the market since officially, production of SSP in the last three years has gone down while sales have gone up during the same period.
It was at the behest of FAI that the government has asked for the auditing of SSP plants, Punshi said.
The SSP segment of the fertiliser industry, according to Punshi, has always been sidelined compared to the attention focused on urea and di-ammonium phosphate (DAP) --which account for the bulk of the Rs 10,000 crore fertiliser subsidy.
"However, SSP has distinct advantages over other fertilisers, including DAP. It delivers the same quantity of phosphates as that obtained from DAP. Moreover, SSP also provides additional secondary nutrients such as calcium and sulphur," he said.
The crux of the problem, according to Punshi, lies in the fact that while the concession rate is fixed by the Central government, the selling prices are fixed by state governments.
The resultant lack of coordination leads to a situation where despite reasonable increase in costs of production and distribution, realisation from sales remain unrealistic.
Punshi says that Indian fertiliser units have significant import dependence, with most basic raw materials such as rock phosphate, sulphur and ammonia being imported.
"This is not a matter of major concern for urea manufacturers since all variable cost fluctuations are compensated under the retention pricing scheme. However, the vulnerability of phosphatic fertiliser manufacturers to exchange rate fluctuations is high."
Therefore, according to Punshi, building up requisite raw material linkages assumes critical importance.
