Despite the monsoon appearing to gain strength to boost fertilizer sales, Fertilisers and Chemicals Travancore Limited is among fertilizer-makers apprehensive about the impact of the Goods and Services Tax regime on fertilizer sales in the coming season.
GST is set to be rolled out on July 1 even as the peak fertilizer sales season gets under way.
FACT sources said there was no tax on fertilizers in Kerala. Tamil Nadu had imposed a sales tax rate of 5% while Andhra Pradesh imposed 5.5% tax. However, the proposed GST rate for fertilizers is 12% for all the States.
Subsidised fertilizers
Besides, there is fear about new norms on sale of subsidised fertilizers being imposed by the government.
“The government insists on Aadhaar card and fingerprint for fertilizer sales,” sources said. This may have an adverse impact as many farmers may be illiterate or semi-literate and averse about the formalities though the government intention is to provide subsidy directly to the farmers like in the case of cooking gas subsidy.
FACT sources pointed out that the public sector fertilizer-maker stood to gain some relief by way of a marginal increase in Factamfos subsidy. The subsidy on the fertilizer mix has been hiked to ₹6,488 from ₹6,085.
The sale of Factamfos has gradually picked up momentum following good rainfall over most of Kerala. The sale is expected to peak within a couple of weeks and by that time, the monsoon is expected to be active over Andhra Pradesh and Karnataka, where fertilizer from FACT has great demand. “Factamfos sale during the month of June is expected to be 70,000 tonnes,” sources added. At present FACT has a stock of 65,000 tonnes of Factamfos and 8,200 tonnes of ammonium sulphate.
FACT had resumed production of ammonia at its own plant using LNG at the Udyogamandal unit. This will now ease raw material constraints to a certain extent. Till now FACT was depending on imported ammonia, which was cheap earlier.
Added to the fears over GST is the low price of natural rubber, which is bound to reduce fertilizer consumption in the sector.
