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pricing scheme - Shanmugam IAS academy in coimbatore
pricing scheme


What’s in news?

Centre approved the proposal of Department of Fertilisers to remove ambiguities in the Modified New Pricing Scheme -III (NPS-III) for the determination of fixed costs for the urea units.

Key data’s:

  • The Modified NPS scheme-III was launched in 2014.
  • So far, there have been four NPS schemes. The latest NPS-3 scheme was modified in April 2014 and has been extended for a year. The scheme was modified to give boost to PM’s Make in India Campaign.
  • The Modified scheme provided incentives to the domestic urea manufacturers, encouraged investment in urea production sector, reduced urea imports.
  • It mainly aimed to achieve self-sufficiency in urea production.
  • However, the scheme could not be implemented due to its ambiguous language. The new notification is to facilitate smooth implementation of the scheme with an additional grant of Rs 350 per metric tonne to 30 urea manufacturing units. The GoI has restricted import of Urea greatly.
  • The approval will also grant the special compensation of Rs 150/MT to urea units, which are more than 30 years old and converted to gas, which will incentivise these units to remain viable for sustained production.

Other urea related policies:

New Urea Policy, 2015:

  • To incentivize domestic manufacturers and free transportation of P (phosphorus) and K (potassium) fertilizers. It will be in force from 2015 to 2019 (4 Financial years)

Need for the Policy:

  • India is world’s third-largest consumer of fertilizers
  • India is highly import-dependent in the case of urea. Presently, India is importing about 80 lakh metric tonnes of urea out of total demand of 310 lakh metric tonnes


  • Maximize indigenous Urea Production to reduce import dependency and reduce subsidy burden on the government
  • Promote energy efficiency to reduce Carbon-footprint (via energy efficiency) to make Urea production environment friendly. [This will be done via revised specific energy consumption norms]
  • Make Urea production plant to adopt best technology available and become globally competitive
  • Rationalization of Subsidy burden
  • Timely supply of Urea to farmers at the same MRP

Links to note:

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