Fertilizer Association of India has Announced to Reduce Import Duty on Raw Materials

 India: FAI (Fertilizer Association of India), the regulatory authority of fertilizer industry, has made an announcement to provide a relaxation in import duty on raw materials which are used in the production of complex plant nutrients. FAI has made this decision to boost the domestic production of complex plant nutrients. Lower price of imported finished products has made the domestic production of fertilizers unviable in India. According to FAI, foreign suppliers have formed a cartel and have kept the prices of raw material higher to dump the complex fertilizer, including DAP, in the country. Additionally, the association has commented that exporters of raw materials and finished products are same business entities and these entities are artificially pricing the raw materials and finished products in a manner that it is completely uneconomical to produce finished products in India. At present, 5% import duty is applied on phosphoric acid, ammonia, Sulphur and 2.5% on rock phosphate. The duty on finished products like DAP and complex fertilizer is also at the same level.

TechSci Research depicts that reducing the import duty on raw materials such as phosphoric acid, ammonia, Sulphur would boost the domestic production of DAP and other complex fertilizers. Over the past few years, equal custom duty on raw materials and finished products, and almost similar subsidy on imported and domestic products have been unfavorable for domestic fertilizer industry. Therefore, effective measures are required to be devised & implemented to revive the domestic production of fertilizers in the country.

According to the upcoming report by TechSci Research, “India Phosphoric Acid Market, By Grade (Fertilizer and Technical), By Application (Fertilizers, Pharmaceutical, Food & Beverage etc.), By Region, Competition Market Forecast & Opportunities, 2011-2021”, India has an import-driven phosphoric acid market which is forecast to exhibit steady growth over the next five years on account of expanding fertilizers industry in India. Indian phosphoric acid imports accounted for about 44% of global trade in 2015. Surged demand for fertilizers coupled with declining global DAP prices has resulted in robust growth in the DAP imports in India. However, increase in production capacity of phosphate fertilizer manufacturing facilities in India along with mounting cross border investments in order to establish joint venture companies in fertilizer rich countries is expected to reduce the reliance on imported raw materials for manufacturing of phosphatic fertilizers. Moreover, growing demand for phosphoric acid for non-fertilizer applications, such as, pharmaceutical, food and beverages, water and metal treatment, detergents is further anticipated to stimulate the phosphoric acid market of India through 2021.