Executive Summary:
The Ministry of Chemicals and Fertilizers addresses initiatives to increase fertilizer production and promote its use, along with measures to handle rising input costs and enhance agricultural sustainability. Key initiatives include the New Investment Policy (NIP) 2012 for urea and the Nutrient Based Subsidy (NBS) policy for phosphatic and potassic (PK) fertilizers. The document details increased urea production capacity and subsidy schemes to ensure affordability for farmers.
Key Points / Main Content:
Urea Production Enhancement:
* New Investment Policy (NIP) 2012: Facilitated investment in the urea sector with amendments on October 7, 2014, aiming for self-sufficiency. Six new urea units established, including four through Joint Venture Companies (JVCs) and two by private companies, adding a total capacity of 76.2 LMTPA.
* Talcher Fertilizers Limited (TFL): Revival of the Talcher unit of FCIL through a JVC, setting up a new Greenfield Urea plant of 12.7 LMTPA using coal gasification.
* Brahmaputra Valley Fertilizer Corporation Limited (BVFCL): Approval for a new Brownfield Ammonia-Urea Complex with a 12.7 LMT annual urea production capacity in Namrup, Assam.
* New Urea Policy (NUP) 2015: Increased urea production by 20.25 LMT annually from existing gas-based units. Overall urea production increased from 225 LMT per annum (2014-15) to 306.67 LMT (2024-25).
Phosphatic and Potassic (PK) Fertilizers:
* Nutrient Based Subsidy (NBS) Policy: Implemented since April 1, 2010, for PK fertilizers, allowing companies to import under Open General License (OGL).
* Expansion of NBS Scheme: Increased the number of PK fertilizers covered from 22 grades in 2021 to 28 grades.
* Freight Subsidy on SSP: Applicable since Kharif 2022 to promote the use of indigenously manufactured SSP.
Addressing Input Costs and Affordability:
* Urea Subsidy Scheme: Urea provided to farmers at a subsidized Maximum Retail Price (MRP) of Rs. 242 per 45 kg bag, excluding neem coating and taxes.
* NBS Scheme Provisions: Special provisions, including Rs. 3500 per MT to cover Other Costs from factory gate to farm gate, advantage/disadvantage due to international price fluctuations, GST component, and reasonable return, extended to both imported and domestic DAP and imported TSP for Kharif 2025.
Impact Analysis:
Fertilizer Manufacturers/Importers:
* Impact: Benefit from subsidies under the Urea Subsidy Scheme and NBS Scheme.
* Action Required: Comply with MRP regulations for urea and monitor market dynamics for PK fertilizers under NBS, claiming subsidies as applicable.
Farmers:
* Impact: Access to urea at subsidized rates and affordable PK fertilizers due to government subsidies and price monitoring.
* Action Required: Utilize subsidized fertilizers to improve agricultural productivity, noting the applicable MRP for urea.
Government of India:
* Impact: Fulfillment of commitment to support the agricultural sector by ensuring fertilizer affordability and availability.
* Action Required: Continue monitoring fertilizer production, distribution, and pricing, adjusting policies as needed to ensure sustainability and affordability.
Key Entities Referenced
New Investment Policy NIP 2012: A policy announced by the Government of India on 2nd January, 2013, and amended on 7th October, 2014, to facilitate investment in the Urea sector.
Ramagundam Fertilizers and Chemicals Ltd RFCL: A Joint Venture Company (JVC) that set up the Ramagundam Urea unit in Telangana.
Telangana: The state in India where the Ramagundam Urea unit of RFCL is located.
Hindustan Urvarak Rasayan Limited HURL: A Joint Venture Company (JVC) that set up three Urea units in Gorakhpur Uttar Pradesh, Sindri Jharkhand, and Barauni Bihar.
Uttar Pradesh: The state in India where Gorakhpur Urea unit of HURL is located.
Jharkhand: The state in India where Sindri Urea unit of HURL is located.
Bihar: The state in India where Barauni Urea unit of HURL is located.
New Urea Policy NUP 2015: A policy notified on 25th May, 2015, for the existing 25 gas-based Urea units with the objective of maximizing indigenous Urea production.
GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF FERTILIZERS
LOK SABHA
UNSTARRED QUESTION NO. 3287 TO BE ANSWERED ON 08.08.2025
Initiative to Increase Fertilizers Production
3287: SHRI VISHNU DAYAL RAM:
SMT. KAMALJEET SEHRAWAT:
MS. KANGNA RANAUT:
SHRI BHARTRUHARI MAHTAB:
SHRI JANARDAN MISHRA:
Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:
(a) the initiatives being taken to increase fertilizer production and to promote its use
among farmers; and
(b) the measures put in place to address rising input costs and enhance sustainability
in agriculture?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF CHEMICALS AND FERTILIZERS
(SMT. ANUPRIYA PATEL)
(a): With regard to Urea, the Government had announced New Investment Policy
(NIP) – 2012 on 2nd January, 2013 and its amendment on 7th October, 2014 to
facilitate fresh investment in the Urea sector and to make India self-sufficient in the
Urea sector. Total 6 new Urea units have been set up under NIP-2012 which includes
4 Urea units set up through Joint Venture Companies (JVC) of nominated PSUs and 2
Urea units set up by the private companies. The units set up through JVC are
Ramagundam Urea unit of Ramagundam Fertilizers and Chemicals Ltd (RFCL) in
Telangana and 3 Urea units namely Gorakhpur, Sindri and Barauni of Hindustan
Urvarak & Rasayan Limited (HURL) in Uttar Pradesh, Jharkhand and Bihar,
respectively. The units set up by private companies are Panagarh Urea unit of Matix
Fertilizers and Chemicals Ltd. (Matix) in West Bengal; and Gadepan-III Urea unit of
Chambal Fertilizers and Chemicals Ltd. (CFCL) in Rajasthan. Each of these units has
installed capacity of 12.7 Lakh Metric Tonne per annum (LMTPA). These units are
highly energy efficient as they are based on latest technology. Therefore, these units
have together added Urea production capacity of 76.2 LMTPA, thereby total-2-
indigenous Urea production capacity (Reassessed Capacity, RAC) has increased from
207.54 LMTPA during 2014-15 to 283.74 LMTPA during 2023-24. Further, an
exclusive policy for the revival of Talcher unit of FCIL through JVC of nominated PSUs
namely Talcher Fertilizers Limited (TFL) by setting up a new Greenfield Urea plant of
12.7 LMTPA at coal gasification route has also been approved. Recently, the Union
Cabinet has approved the proposal for setting up of a new Brownfield Ammonia-Urea
Complex of 12.7 Lakh Metric Tonnes (LMT) annual capacity of Urea production within
the existing premises of Brahmaputra Valley Fertilizer Corporation Limited (BVFCL),
Namrup, Assam.
In addition, the Government also notified the New Urea Policy (NUP) – 2015 on 25th
May, 2015 for the existing 25 gas-based Urea units with one of the objectives of
maximizing indigenous Urea production beyond RAC. The NUP-2015 has led to
additional production of Urea by 20-25 LMT as compared to the production during
2014-15 annually.
Above steps together have facilitated increase of Urea production from level of 225
LMT per annum during 2014-15 to 306.67 LMT of Urea during 2024-25.
Further, the Government has implemented Nutrient Based Subsidy Policy w.e.f.
01.04.2010 for Phosphatic and Potassic (P&K) Fertilizers. Under NBS policy, P&K
fertilizers are covered under Open General License (OGL) and companies are free
to import these fertilizers as per their business dynamics.
To boost fertilizer production and make country self-reliant the following measures
have been taken by the Government:
(i) Based on the requests, the new manufacturing units or increase in manufacturing
capacity of existing units have been recognized / taken on record under the NBS
subsidy scheme.
(ii) The number of P&K fertilizers covered under NBS policy has increased from 22
grades in 2021 to 28 grades.
(iii) Freight Subsidy on SSP, which is an indigenously manufactured fertilizer, is
applicable since Kharif, 2022 to promote SSP usage for providing Phosphatic or 'P'
nutrient to the soil.
(b): Under Urea Subsidy Scheme, Urea is presently provided to the farmers at a
statutorily notified Maximum Retail Price (MRP). The MRP of 45 kg bag of Urea is
Rs.242 per bag (exclusive of charges towards neem coating and taxes as applicable).
The difference between the delivered cost of Urea at farm gate and net market
realization by the Urea units is given as subsidy to the Urea manufacturer/importer-3-
by the Government of India. Accordingly, all farmers of the country are supplied Urea
at the subsidized rates and thereby are beneficiaries of this scheme.
Under NBS Scheme, MRP is fixed by fertilizer companies as per market dynamics at
reasonable level which is monitored by the Government. However, to ensure
affordability, special provisions like Rs. 3500 per MT to cover ‘Other Costs’ which
includes costs incurred from factory gate to farm gate, advantage / disadvantage due
to increase / decrease in international prices, provision for GST component included
in the MRP and provision for reasonable return @ 4% of net MRP (MRP-GST) have
been extended to both imported and domestic DAP and imported TSP over and
above NBS subsidy for Kharif 2025 season to ensure availability in view of rising input
costs.
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