India cuts potash subsidy to lowest in a decade

Gujarat State Fertilizers & Chemicals

22/04/2020 14:43

By Rajendra Jadhav
    MUMBAI, April 22 (Reuters) - India on Wednesday cut
subsidies for potash-based fertiliser by 9% to the lowest in a
decade, as the world's leading importer of the crop nutrient
tries to contain a fiscal deficit.
    The reduction in government support amid a slide in the
rupee  INR=D4  currency could lead to higher retail prices for 
farmers and potentially dent consumption and imports.
    India has fixed the potash subsidy at 10.116 rupees per kg
for the 2020-21 fiscal year started on April 1, down from 11.124
rupees the year before, a government statement said. 
    Global producers including Uralkali  URKA.MM , Nutrien
 NTR.TO , K+S  SDFGn.DE , Arab Potash  APOT.AM  and Israel
Chemicals (ICL)  ICL.TA ,  ICL.N  are key suppliers to India.
    India relies on imports to fulfil its entire consumption of
potash, bringing in more than 4 million tonnes every year.
    "Already imports have become expensive due to the weak rupee
and now you have lower subsidy. Fertilizer producer have no
choice but to raise prices sometime later this year," said an
official with a leading potash importing firm.
    The Indian rupee  INR=D4  hit a record low on Wednesday.
    Indian farmers are price sensitive and have in the past
trimmed purchases when prices rose, industry officials said.
    The drop in subsidy will affect India's negotiations with
overseas suppliers for new contracts, said a New-Delhi based
fertilizer producer.
    "Importers will obviously try to settle new contracts at
lower level," the official said.
    India buys potash from global miners in annual contracts
that the south Asian country could sign after May, industry
officials said.
    Contracts signed by India and China are considered
benchmarks globally, and are closely watched by other potash
buyers such as Malaysia and Indonesia.
    On Wednesday, New Delhi also cut its phosphate subsidy by
more than 2% for 2020-21 to 14.888 rupees per kg, the lowest in
three years, it said.
    India is the world's top importer of the crop nutrient
diammonium phosphate (DAP).

 (Reporting by Rajendra Jadhav; Editing by Mark Potter)
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