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i) Fixation of
MRPs:
Under the scheme, maximum retail
prices (MRPs) for the fertilizers
covered under the scheme are indicated
by the Government of India since 1.4.97.
However, MRPs for SSP are continued
to be fixed by the States. In order
to avail of concession under the Scheme,
the manufacturers/importers are required
to sell the decontrolled fertilizers
at the applicable MRP.
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ii) Computation
of Concession
The concession rates for decontrolled
phosphatic and potassic (P&K)
fertilizers are based on the cost
price study of DAP (indigenous and
imported) and MOP conducted by the
then Bureau of Industrial Costs &
Prices (BICP) (now Tariff Commission)
in 1998 alongwith the modifications
proposed by an Inter Ministerial Group
(IMG) consisting of representatives
of Department of Agriculture and Cooperation,
Department of Expenditure, Department
of Fertilizers and Planning Commission.
The concession rates for DAP (indigenous
and imported) and MOP are arrived
at by subtracting the cost of sales
from the Maximum Retail Prices (MRPs)
indicated under the Concession Scheme.
For indigenous DAP, the cost of sales
is the sum of the normative industry
price (including cost of raw materials,
conversion cost and return) and the
selling and distribution cost; for
imported DAP and MOP, the industry
cost of sales includes average C&F
cost of imported material, customs
duties, selling and distribution cost
and reasonable return. The concession
rates for complex grade fertilizers
have been so far derived from the
concession rates of indigenous DAP
and MOP proportionate to their nutrient
content. The policy of the Government
is to maintain a reasonable differential
in the rates of concession in favour
of indigenous DAP vis-a-vis imported
DAP and as the domestic industry faces
certain disadvantages in the availability
of raw materials used in the manufacture
of DAP in the country.
The manufacturers and importers
are paid concession (subsidy) to enable
them to sell the fertilizers at or
below the indicated MRPs. The concession
is roughly the difference between
the MRP and the industry average cost
of production/sales for indigenous
DAP; and the MRP and the cost of import/sales
for imported DAP. The final rates
of concession on indigenous DAP, imported
DAP and MOP (correspondingly on complexes)
are adjusted on quarterly basis according
to fluctuations in the prices of raw
materials/intermediates (ammonia and
phosphoric acid) and the exchange
rate as well as the prices of DAP
in the international market.
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iii) Fertilizers
Covered:
Phosphatic & Potassic Fertilizers
covered under the Concession Scheme
are:
- Di-Ammonium Phosphate
(DAP) (indigenous & imported)
- Muriate of Potash
(MOP)
- Single Super Phosphate
(SSP)
- NPK Complex Grade
Fertilizers:
- 10:26:26
- 12:32:16
- 14:28:14
- 14:35:14
- 15:15:15
- 16:20:0
- 17:17:17
- 19:19:19
- 20:20:0
- 23:23:0
- 28:28:0
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iv) `On-account'
and `final' payment of concession:
The payments made under the Scheme
include 'On account' payment of concession
claim and balance payment (final settlement
of claim). The 'On account' payment
is made with reference to applicable
base rate and is in the nature of
advance payment awaiting settlement
of claim which is done after receipt
of certification of sales by the concerned
State/UT. The manufacturers/importers
are also allowed differential payment
with reference to base rate and final
rate announced for the quarter. The
balance payment is made only after
the receipt of certification of sales
in Proforma 'B' from the concerned
State Government based on final concession
rate for the applicable quarter of
year.
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v) Eligibility
for `on account' & facility of
Bank Guarantee:
Manufacturers of P&K fertilizers
are eligible for 85% 'On account'
(upto 90% if supported by a Bank Guarantee)
payment of concession, on the quantities
of these fertilizers sold for agricultural
use or to registered (under FCO) manufacturers
of NPK mixture fertilizers. For details
on Bank Guarantee facility, the requisite
format etc. kindly see Guidelines
dated 5.8.02.
Importers notified under the Concession
Scheme for P&K fertilizers who
have been importing these fertilizers
at least for the immediate preceding
two years are eligible for 80% `On
account' payment. The two year condition
for receiving `on account' payment
can be relaxed on case to case basis
if the importer is willing to offer
Bank Guarantee (BG) against an amount
equivalent to 100% payment of the
claim under the Scheme. Any occasional
importer of P&K fertilizers, after
induction, is eligible to receive
100% payment after receipt of certification
of sales only.
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vi) Freight support
for transportation of fertilizers
to hilly and inaccessible areas:
Under the Concession Scheme freight
support for transportation of indigenous
P & K fertilizers and imported
DAP/MOP to hilly and difficult/remote
areas was introduced from 1.4.97,
intially for Jammu & Kashmir and
North East States. From Rabi 1998-99,
it has been extended to State of Himachal
Pradesh, hilly areas of West Bengal
and Uttaranchal. The payment under
the Scheme is on actual movement of
P & K fertilizers from the declared
rake point to the consumption centres.
The actual movement of fertilizers
by road requires to be certified by
the concerned State Government. In
case the cost incurred on transportation
is lower than the rates notified,
the payment is restricted to the actual
cost of transportation.
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