The Indian government is considering restarting the sale of state-owned fertiliser companies in the next fiscal year, according to a recent report by ‘The Mint’. This move is part of a broader strategy by the Modi government to enhance domestic fertiliser production and reduce the country’s reliance on imports.
The Plan for Selling State-Owned Fertiliser Companies
The government is planning to gradually put eight major public sector fertiliser companies up for sale. These companies include:
- Brahmaputra Valley Fertilizer Corp Ltd
- Fertilizers and Chemicals Travancore (FACT)
- FCI Aravali Gypsum and Mineral Ltd
- Madras Fertilizers Ltd
- National Fertilizers Ltd
- Rashtriya Chemicals & Fertilizers (RCF)
- Fertilizer Corporation of India Ltd
- Hindustan Fertilizer Corporation Ltd
In addition to these companies, certain units of Fertilizer Corporation of India located in Gorakhpur, Sindri, Talcher, and Ramagundam may also be put up for sale. Some closed plants might be reopened, refurbished, and prepared for sale to attract potential buyers.
Ongoing Discussions and Future Steps
While these plans are being discussed, no final decision has been made yet. The idea to sell these fertiliser companies was initially proposed by Niti Aayog in 2022. However, the government postponed the sale to prioritize boosting domestic production. Now, as part of the new strategy, the government aims to become more self-sufficient in fertiliser production before moving forward with the sale.
Goals to Reduce Fertiliser Imports
One of the main objectives of this plan is to cut down on the country’s fertiliser imports. The government hopes to reduce urea imports by 30% by the end of 2024 and eventually stop importing urea altogether by FY26. Currently, India imports urea mainly from countries like Oman, Qatar, Saudi Arabia, and the UAE. In FY24, India imported 7.04 million tonnes of urea worth $2.61 billion, which is a decrease from 7.57 million tonnes in FY23.
Financial Implications
The government’s efforts to reduce reliance on imports come with changes in the fertiliser subsidy budget. For FY24, the fertiliser subsidy was set at Rs 1,88,894 crore, but it has been reduced to Rs 1,64,000 crore for FY25. Despite these changes, the sale of stakes in the fertiliser companies is not expected to affect subsidy payments.
Positive Developments in the Fertiliser Sector
Experts have noted that the government’s initiatives to revive old fertiliser plants and set up new ones have shown positive results. Domestic production of fertilisers increased by 20% to 31.4 million tonnes, and imports decreased by at least 10% in FY24. According to Chirag Jain from Grant Thornton Bharat LLP, these efforts have not only brought attention to the fertiliser industry but have also improved efficiency and made these companies potentially profitable.
Conclusion
India’s plan to sell state-owned fertiliser companies and focus on increasing domestic production reflects its goal to become self-sufficient in fertiliser production. By reducing imports and boosting local output, the government aims to strengthen the country’s agricultural sector and ensure a stable supply of fertilisers for farmers. As discussions continue, the outcome of these plans will have significant implications for the future of India’s fertiliser industry.
