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.