Govt to reform urea policy; price hike not on cards now

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26 Aug, 2025 12:21

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Government plans to bring changes in the urea policy to boost domestic production, but it is unlikely to increase the price of the soil nutrient. Urea, which is under government's control, is being sold at a highly subsidised rate of Rs 5,360 per tonne. The difference between the maximum retail price (MRP) and the cost of production is reimbursed to manufacturers as subsidy by the central government.

"Without increasing urea prices, there will be far reaching reforms in the sector," a highly placed source told PTI when asked about whether there is plan to decontrol urea. Recently, Fertiliser Minister Ananth Kumar had told reporters that urea policy is being reformed to make India self-sufficient in the next five years. In urea policy reform, sources said, the ministry is considering measures for boosting urea production by making plants more energy efficient, pooling of gas supplied to the urea facilities and direct transfer of subsidy to farmers.

"In direct transfer of fertiliser subsidy, there are some challenges. For example, in many cases land owners are not the actual cultivators," a government official said. The Centre is unlikely to free urea imports, which is currently done by only three canalising agencies, STC, MMTC and Indian Potash Ltd, the official added.

The Centre has started taking steps to boost domestic production of urea. Joint venture agreements have been signed to revive two closed fertiliser units of FCIL at Talcher (Orissa) and Ramagundam (Telangana) with an investment of about Rs 14,000 crore. The Centre has also made some changes in the urea investment policy, under which it will permit setting up of new plants.

At present, the country imports about 8 million tonnes of urea to meet the annual domestic demand of 30 million tonnes. India produces about 22 million tonnes of urea annually. For fertiliser subsidy of about Rs 73,000 crore budgeted for 2014-15, about Rs 48,000 crore is on account of urea only.