The government has implemented controls on the pricing of di-ammonium phosphate (DAP), muriate of potash (MOP), and other fertilizers receiving nutrient-based subsidy (NBS) support under the category of reasonable pricing. Unlike urea, whose maximum retail price (MRP) is set by the government, NBS fertilizers are technically not under direct price control.
Instead, under the NBS scheme initiated in April 2010, their MRPs are meant to be determined by the market and set by the respective companies selling them. The government provides a fixed per-tonne subsidy on each of these fertilizers, linked to their nutrient content, including nitrogen (N), phosphorus (P), potassium (K), and sulfur (S).
The new guidelines introduce indirect MRP controls on non-urea fertilizers by limiting the profits that companies can derive from their sales. These limits are based on their total cost of sales, encompassing production/import costs, administrative overheads, selling and distribution expenses, as well as net interest and financing charges. A deduction for the dealer’s margin is permitted up to 2% of the MRP for DAP and MOP, and 4% for all other NBS fertilizers.
As reported by The Indian Express, fertilizer companies are required to conduct a self-assessment of unreasonable profits, utilizing a cost auditor’s report along with audited cost data approved by their board of directors. The information must be submitted to the Department of Fertilizers (DoF) by October 10 of the subsequent fiscal year. The DoF will then review the reasonability of MRPs submitted by the companies by February 28 for each completed previous financial year (e.g., for FY 2023-24 by February 28, 2025).
