Budget 2023: Private fertiliser companies likely to benefit big soon. Here's why

The Budget 2023-24 may bring some good news for the manufacturers of fertilisers especially urea. The finance ministry is likely to decide soon on the formation of a committee to review the input fixed cost for fertiliser manufactures, sources told Zee Business.

India meets about one third of its urea demand through imports.

Budget 2023: As India awaits the Finance Minister's Union Budget for the year 2023-24, there may be some good news for fertiliser companies. The finance ministry is likely to decide soon on the formation of a committee to review the input fixed cost for fertiliser manufactures, sources told Zee Business.

The fertiliser ministry had sought the formation of such a committee in view of demands of the industry, which has for long demanded a revision in the fixed cost of production.

The subsidy for fertilisers may come down in 2023-24 compared with the outgo of the current year, which may enable the government to take additional burden of a higher fixed cost, the sources said.

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The panel will discuss fixed costs with 37 urea plants across the country, they added.

Zee Business Managing Editor Anil Singhvi said private urea makers are likely to benefit more from such a development as their fixed cost is lesser compared to their state-run counterparts.

ALSO READ | Govt may increase urea subsidy to tide over supply deficit

"One can expect significant action for fertiliser companies by Budget and urea manufacturers can benefit in a big way," Zee Business's Singhvi said.

He also said Chambal Fertilisers, Coromandel International and Rashtriya Chemicals & Fertilizers (RCF) are likely to benefit the most.

Urea is a nitrogen-based fertiliser. The government provides a subsidy to fertiliser makers to ensure below-market fertiliser rates for farmers. The fertiliser ministry calculates the fixed production cost of urea to pay subsidy.

For a urea plant, fixed costs primarily include components such as salaries and wages, contract labour, repair, maintenance and selling expenses.

In Budget 2022-23, the government had earmarked Rs 1.05 lakh crore towards the fertiliser subsidy bill. However, it provided additional support of Rs 1.1 lakh crore to counter a sharp increase in global prices.

ALSO READ | Subsidy on DAP fertiliser hiked by 140%

India meets about one third of its urea demand through imports.

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