Dec 06, 2012, 10.53 PM | Source: PTI
The Cabinet Committee on Economic Affairs (CCEA) today deferred a decision on new urea investment policy as Fertiliser Minister M K Azhagiri was not present in the meeting.
In a separate meeting, the Cabinet approved Food Ministry's proposal to extend imposition of stockholding limits on rice/paddy by traders for one year till November, 2013, sources said.The step was taken with a view to preventing hoarding of food grains.
The stockholding limit on these two items had expired in November this year. The extension has been given to seven states, including Delhi, Maharashtra, Andhra Pradesh and Tamil Nadu, they added.
According to sources, "The urea investment policy was not taken up as the concerned minister was absent". The new urea investment policy, which is likely to incentivise fertiliser firms for setting up new plants and expanding existing capacity, is likely to attract a fresh investment of about Rs 35,000 crore to increase domestic production by 8 million tonnes.
The Fertiliser Ministry has drafted a new policy as the 2008 urea investment policy failed to attract fresh investment in the sector. India faces shortage of 10 million tonnes of urea, which is met through imports.
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.
At present, the government controls the urea sector and has fixed maximum retail price (MRP) at Rs 5,360 per tonne. The difference between the MRP and cost of production is given as subsidy to manufacturers.
The country produces 22 million tonnes of urea, against the requirement of 32 million tonnes.