The Hindu Business Line : No decision yet on fertiliser subsidy — DAP producers threaten to stop production

WITH the Ministry of Finance delaying a decision on the increase in subsidy for di-ammonium phosphate (DAP) production for the current financial year, the seven major DAP producers are now planning to inform the Government that they would stop production as continuation of operations would only increase their losses.

The seven major DAP producers in the country are Tata Chemicals, Godavari Fertilisers, Madras Fertilisers, Gujarat State Fertiliser Corporation (GSFC), Zuari Agro, IFFCO and Paradip Phosphates. Of these seven companies, Madras Fertiliser and GSFC are already loss-making.

According to sources, the Fertiliser Ministry had sent its recommendations to the Finance Ministry stating that there was a case for increasing the subsidy owing to the increase in international prices of phosphoric acid used in making DAP. The Finance Ministry, however, has not yet been able to take any decision.

On the other hand, the manufacturers have been sourcing the raw material from the international market at current prices which are much higher as compared to last year. The companies have already cut down on production because the Government is providing subsidy at last year's rate. Earlier this month, these companies had informed the Government about their respective production cuts.

Currently, Government has been providing subsidy at last year's rate only to the fertiliser companies.

The Fertiliser Association of India (FAI) is compiling data on the financial impact of phosphoric acid shortage due to high global prices as well as the impact of lesser availability of DAP in the market. Though FAI does not handle DAP on its own and the entire negotiations with the Government as well as international sellers were handled by a user group headed by the Tata Chemicals Managing Director, Mr Prasad Menon, the FAI came into the scene at the behest of the industry.

The FAI Director General, Mr Viren Kaushik, told Business Line that "we are compiling detailed data on the impact of phosphoric acid shortage in the country and will approach the Government with what impact it would have if the issue is not taken care of with importance."

Interestingly, sources said that the Finance Ministry had noted that the subsidy given for indigenously manufactured DAP and imported DAP should be the same. But the Gokak Committee report of 2002 had recommended that the subsidy for indigenously manufactured DAP should be 26 per cent higher that imported DAP and this recommendation had also been approved by the Cabinet at that time.