Govt to Raise Fixed Costs for Urea Makers by Year-End: Fertilisers Secretary

The government plans to increase fixed cost payments to 30 gas-based urea manufacturers by the end of this year, Fertilisers Secretary Rajat Kumar Mishra said on Wednesday, addressing industry concerns over costs that have not been revised in nearly 25 years.

The fixed costs, which cover working capital requirements including salaries and plant maintenance, have remained unchanged since 2000 despite sharp inflation, Mishra told reporters on the sidelines of a Fertiliser Association of India (FAI) event.

"We are going to decide very soon... I expect very soon... So, let's hope that before the end of the year, we will be able to do it," Mishra said, adding that the decision would be taken at the ministry level without requiring cabinet approval.

The government has not yet determined if the increased costs will take effect from April 1, 2025, or restore the Rs 2,300 per tonne minimum fixed cost floor retrospectively from April 1, 2014.

"The whole thing is in a basket," Mishra said. "We will decide everything, the effectivity, the reference date, the scale and how it will be implemented, whether in one go or in stages." Companies currently receive Rs 2,800-3,000 per tonne in reimbursements and additional Rs 350 per tonne increase added in March 2020 that eliminated the previous Rs 2,300 floor.

"Ensuring a fair and timely revision of fixed costs is essential for sustaining operations and encouraging future investments," FAI Chairman S Shankarsubramanian said.

Mishra said fertiliser availability remains strong through domestic production and imports, with supplies from Saudi Arabia, Morocco, and Russia helping maintain inventory.

He highlighted nano-urea as a cost-effective alternative that's easier to transport and applied directly to leaves.

Earlier, addressing the FAI event, the secretary emphasised India's push toward balanced fertiliser use combining organic and inorganic options, noting excessive nitrogen reliance poses sustainability challenges despite boosting productivity over five decades.