In the past 13 years there has been no new urea capacity addition in India. The demand supply-gap has widened over the past decade. Currently domestic urea production is of about 22 million tonnes and the consumption is of some 29 million tonnes; the 7 million tonnes shortfall is bridged through imports. There is now a plan within the Indian authorities to go ahead with a new investment strategy for the fertilizer sector, especially urea. This policy seeks to create a 1.5 million-tonne capacity for the production of urea over a five year-period.
The new policy may provide gas linkage for up to 75 per cent of new capacity created from domestic gas resources, while the rest will have to be met through imports. The Government may provide a subsidy for the price differential between domestic and imported gas.
The proposed policy is for both Greenfield (new plants) and brownfield plants, i.e.
capacity addition to existing plants or revival of old or closed plants. The proposed policy is based on the current availability of gas within the country and rising trend in global gas prices. The new policy is expected to be announced in the Budget for 2012-13 and then the issue will be placed before the Cabinet for a final decision.