Rationale and process of Urea Import on Government account

Rationale and process of Urea Import on Government account

The following is a rebuttal regarding the issue of import of Urea raised by ShriUttam Gupta in his article in Financial Express dated 13.01.2020.

Introduction

There are two main agricultural seasons in India – ‘Kharif’ from 1^st April to 30^th September and ‘Rabi’ from 1^st October to 31^st March. The fertilizer requirement (including of Urea) for a season is determined by DAC&FW in consultation with representatives of States/UTs agriculture department before the beginning of a season and communicated to DoF.

Before the beginning of each agricultural season, the Steering Committee of Secretaries (SCOS) comprising of Secretary (Fertilizers) as Chairman, Chairman Railway Board, Secretary (Commerce), Secretary (Expenditure), Secretary (Agriculture) and Secretary (Shipping) as its members (AS&FA, DoF is also a special invitee to the Committee), considers the requirement of Urea for the season determined by DAC&FW, projected indigenous production and expected UOTA imports. Based on its analysis it decides the overall quantity of urea required to be imported on Government Account in a season and authorizes Department of Fertilizers to determine the timing, quantity and STE to import urea on government account, as and when necessary, for ensuring adequate availability of urea in the country.

DoF’s Mandate

DoF is responsible for ensuring adequate and timely supply of fertilizers throughout the country. In order to bridge the gap between the assessed requirement of urea for an agricultural season as determined by DAC&FW and the indigenous production of Urea plus imports under Urea offtake Agreement (UOTA) of GoI with OMIFCO, the Department of Fertilizers imports urea on government account. At present, as per DGFT Foreign Trade policy, import of urea for agriculture purposes is a canalized item and can be imported only through the State Trading Enterprises (STEs) as notified by DGFT from time to time. Currently, MMTC, STC and RCF are the notified STEs.

Process of Urea Import

Since the mandate of DoF is to ensure adequate and timely availability of Fertilizers, In this regard, to bridge the gap between the requirement and indigenous production of Urea plus imports under Urea offtake Agreement (UOTA) of GoI with OMIFCO, the Department of Fertilizers imports urea on government account. The concerned STE’s are authorized on rotation basis to procure imported Urea for DoF through competitive bidding process.

In the present context, since the STEs are Public Sector Undertakings, they are required to adhere to all other directions/guidelines of the GoI on tendering and procurement to ensure international competitive bidding and secure competitive prices.

The DoF does not import Urea on its discretion. There is well designed scrutiny of the proposals to go for any lot of imports. Ascribing discretion and vested interest to DoF functionaries show lack of appreciation of efforts by them in ensuring timely supply of fertilizers to the farming community.