Fertilizer Industry in India

CCEA approved the proposal to hike subsidy rates for Phosphorus and Potassium based fertilizers

• The Cabinet Committee on Economic Affairs has approved the proposal to hike subsidy rates for phosphorus and potassium-based fertilizers by 140% in a bid to provide relief to farmers as the kharif sowing season begins.
• The estimated additional subsidy burden is around ?14,775 crore, with the Centre emphasising that this is a one-time measure as part of COVID-19 relief.
• Unlike urea, where the Centre sets a fixed maximum retail price, non-urea fertilizer prices are decontrolled, with the Centre fixing nutrient-based subsidy rates.
• So far, a 50 kg bag of di-ammonium phosphate (DAP), the fertilizer most popular with Indian farmers after urea, was sold at ?1,200, including a subsidy of about ?500.
• However, the bull run in the global commodity markets has seen a surge in prices of imported raw materials as well as finished fertilizer. In early April, a number of Indian fertilizer companies hiked their DAP prices to 1,900 per bag.
• Farmers’ groups protested against the 700/bag hike, pointing out that their input costs for the Kharif season would spiral out of control.

Fertilizer Industry in India

• It is 1 of the 8 core industries. Fertilizer has the minimum share in Index of Core Industries.
• India is the 2nd largest consumer of Urea fertilizers after China. India also ranks 2nd in the production of nitrogenous fertilizers and 3rd in phosphatic fertilizers. Potash requirement is met through imports since we have limited reserves of potash. There are 2 types of Fertilizers
  1. Primary Fertilizers: classified on the basis of nutrients they supply to soil like N:P:K:
     1. Nitrogenous (Urea),
     2. Phosphatic (di-ammonium phosphate - DAP) and
     3. Potassic (muriate of potash (MOP) fertilizers.
  2. Secondary Fertilizers includes Calcium, Magnesium and Sulphur.
  3. Micronutrients include Iron, Zinc, Boron, Chloride etc.
• Fertilizer subsidy (Food > Fertilizer > Petroleum > Interest payments)
  1. Earlier no Fertilizer subsidy was paid till 1977. Oil crisis of 1973 led to increase in Fertilizer prices leading to a decline in consumption and an increase in food prices. In 1977, Govt subsidized manufacturers.
  2. After 1991 crisis, Govt decontrolled the import of Phosphate and Potash but Urea imports is restricted.

Urea Production and Pricing mechanism

• Urea is the source of Nitrogenous fertilizer and it is heavily subsidized by Center. Today Urea is the only fertilizer which remains controlled.
• CCEA approved continuation of Urea Subsidy Scheme upto 2020
  1. It is a part of Central Sector Scheme. Urea price will be same till 2020.
  2. Now DBT Scheme is approved for fertilizer subsidy to urea manufacturers and importers. It also includes imported Urea subsidy which is directed towards import to bridge the gap between demand and indigenous production of urea. It also includes freight subsidy for movement of urea.
  3. Benefits
     1. DBT will ensure timely payment of subsidy to urea manufacturers. Fertilizer Co. leading to timely availability of urea to farmers.
     2. This will reduce the leakage of fertilizer subsidy and black marketing.
     3. Ceiling might be put to reduce the overuse of Nitrogenous fertilizers.
  4. Subsidy to Fertilizer manufacturer/ importer = Farm Gate price - MRP paid by Farmers.
• New Urea Policy of 2015 (till 2019-20)
  1. With the objective of maximizing indigenous urea production, promoting energy efficiency in urea production and rationalize subsidy.
  2. It is applicable to existing 25 gas based units.
  3. It ensures timely payment to urea manufacturers resulting in timely availability of urea to farmers.
• Urea is given at statutorily controlled price = Rs. 5360/ MT. Other charges for Neem coating.
• Center plans to ease control on the retail prices of Urea and wants to make it more targeted.
• Earlier Mandatory Neem coated urea production was done to slow down the dissolution of nitrogen into soil, resulting into less nutrient requirement.
• Govt is also planning over fixing a Nutrient Based Subsidy (NBS) rate for Urea to promote balanced use of fertilizers and bring efficiency in industry.

CCEA approved continuation of Nutrient Based Subsidy scheme till 2020

• Under this scheme a fixed amount of subsidy decided on annual basis, is provided to fertilizer companies (other than Urea) depending on its nutrient content. It is applicable to 22 fertilizers (other than Urea).
• Govt announces a fixed rate of subsidy on each nutrient of subsidized Nitrogen, Phosphate, Potash and Sulphur fertilizers. MRP is decided by considering international and domestic prices of P&K fertilizers, exchange rate and inventory level in the country.

Infrastructure

• Fertilizer Corporation of India Limited: has 4 units at Sindri (Jharkhand); Gorakhpur (UP); Ramagundam (AP) and Talcher (Odisha) and Korbe (Chattisgarh).
• Hindustan Fertilizer Corporation Limited: at Barauni (Bihar); Durgapur (WB) and Namrup (Assam).
• Rashtriya Chemicals and Fertilizers Limited, Trombay.
• National Fertilizers Limited at Bhatinda (Punjab) and Panipat (Haryana).

Deep Ocean Mission

The Union Cabinet has approved the long-pending deep ocean mission, which among other things involves developing a submersible vehicle that will allow a crew to plunge 6,000 metres into the ocean and hunt the floor for precious metals.

• The Deep Ocean Mission was 2019 envisaged as a ? 8,000 crore mission.
• India has been allotted a site of 75,000 square kilometres in the Central Indian Ocean Basin (CIOB) by the UN International Sea Bed Authority for the exploitation of polymetallic nodules (PMN).
• These are rocks scattered on the seabed containing iron, manganese, nickel and cobalt.

• Funding: In the works since 2018, the mission is expected to cost ?4,077 crores over the next five years. The estimated cost for the first phase of three years (2021-24) would be ? 2,823.4 crore.
• Nodal Ministry: The Ministry of Earth Sciences (MoES) will be the nodal Ministry implementing this multi-institutional mission.

There are 6 components to the programme:

• Submersible Vehicle: A manned submersible will be developed to carry 3 people to a depth of 6,000 metres in the ocean with a suite of scientific sensors and tools. An integrated mining system will be also developed for mining polymetallic nodules at those depths in the central Indian Ocean.
• Ocean Climate Change Advisory Services: The second component involves developing Ocean Climate Change Advisory Services, which entails developing a suite of observations and models to understand and provide future projections of important climate variables on seasonal to decadal time scales.
• Flora and Fauna: The next component is searching for deep sea flora and fauna, including microbes, and studying ways to sustainably utilise them.
• Hydrothermal minerals: The fourth component is to explore and identify potential sources of hydrothermal minerals that are sources of precious metals formed from the earth’s crust along the Indian Ocean mid-oceanic ridges.
• Desalination and OTEC: The fifth component involves studying and preparing detailed engineering design for offshore Ocean Thermal Energy Conversion (OTEC) powered desalination plants.
• Expertise: The final component is aimed at grooming experts in the field of ocean biology and engineering. This component aims to translate research into industrial applications and product development through on-site business incubator facilities.

Significance:

• If this works, India will be among a handful of countries able to launch an underwater mission at such depths.
• The exploration studies of minerals will pave way for the commercial exploitation in the near future, as and when commercial exploitation code is evolved by the International Seabed Authority, an United Nations organisation
• Being able to lay hands on a fraction of that reserve can meet the energy requirement of India for the next 100 years.

Illegal Mining in Meghalaya

• According to available government data, Meghalaya has a total coal reserve of 640 million tonnes, most of which is mined unscientifically by individuals and communities.
• In 2011–12, rat-hole mines produced about 10 million tonnes of coal. This large coal production in a small state had a devastating impact on the environment.

Some of the areas of Coal mining in Meghalaya are

• Ksan in Meghalaya’s East Jaintia Hills

What is a rat hole mine?

• A rat-hole mine comprises a deep vertical shaft with narrow horizontal tunnels, two to four feet in dimension, dug on its sides.
• Miners (mostly child labourers) go into these horizontal tunnels for hundreds of feet to take out coal. Primitive tools are used to build and operate these mines and accidents are common and most are not reported.
• Rat hole mining involves digging of very small tunnels, usually only 3-4 feet high, which workers (often children) enter and extract coal.
• The National Green Tribunal (NGT) banned it in 2014, on grounds of it being unscientific and unsafe for workers. The state (Meghalayan) government has challenged the NGT ban in the Supreme Court.
• Despite a ban, rat-hole mining remains a prevalent practice for coal mining in Meghalaya, where a mine has recently collapsed.
• Since the coal seam is extremely thin in Meghalaya, no other method would be economically viable. Removal of rocks from the hilly terrain and putting up pillars inside the mine to prevent collapse would be costlier. In Meghalaya this is the locally developed technique and the most commonly used one.

Government policy?

• The government does not have a policy in place to regulate mining and the new mining policy drafted in 2012 has not yet been implemented,
• Moreover, the NGT found the 2012 policy inadequate as it does not address rat-hole mining.

Impact of Meghalaya coal mining

• Meghalaya coal has high sulphur content, leading to discharge of sulphuric acid from these mines. The acid discharge in some areas is so severe that they have made the rivers acidic, affecting aquatic life and corroding machinery at hydroelectric projects and dams.
• The water also has a high concentration of sulphates, iron and toxic heavy metals, low dissolved oxygen (DO) and high BOD, showing its degraded quality.
• The roadside dumping of coal is a major source of air, water and soil pollution.
• None of the rat-hole mines had leases; they simply didn’t exist on paper. All of them were operating without any environment clearance from the environment ministry or from the pollution control board. These illegalities were enabled by the so-called legal ambiguity regarding mining in Sixth Schedule areas as mentioned in the Constitution.
• As Meghalaya is a Sixth Schedule state, and the power to make laws with respect to land belongs to the Autonomous District Councils, landowners can mine without any permission from the state or the Union governments. To bolster the argument, it was alluded that the coal mines in Meghalaya were never nationalised.
• However, it was found that the coal mines of Khasi and Jaintia were nationalised under the Coal Mines (Nationalisation) Act, 1973.
• It is also found that paragraph 9 of the Sixth Schedule clearly stipulates the need for “Licences or leases for the purpose of prospecting for, or extraction of, minerals”.
• In addition, it is legally established that all central mining and environmental laws are applicable to the coal mines in Meghalaya.
• On a case filed by the All Dimasa Students’ Union that highlighted the unregulated coal mining in the Jaintia Hills, the National Green Tribunal (NGT) banned them in April 2014. But reports now indicate that in the guise of transporting already-mined coal, illegal mining was happening all along in collusion with the local and the state government.
• The political class supports these mines. The state government has challenged the ban in the Supreme Court and the state assembly in 2015 adopted a resolution urging the Centre to exempt Meghalaya from central laws so that rat-hole mining can continue.
• But such mines are environmentally damaging and unsafe to be allowed, and hence must be banned. The bottom line is the right to self-governance does not translate into the right to destroy the environment, even in the Sixth Schedule areas.
• Off road movement of trucks and other vehicles in the area for coal transportation also adds to the ecological and environmental damage of the area.
• The practice has been declared as unsafe for workers by the NGT.
• The mines branch into networks of horizontal channels, which are at constant risk of caving in or flooding.

Ordnance Factory Board corporatised

About Ordnance Factory Board

• Ordnance Factory Board (OFB) consisting of the Indian Ordnance Factories is a Government agency under the control of the department of defence production (DDP) Ministry of Defence (MoD), Government of India.
• It is engaged in research, development, production, testing, marketing and logistics of a product range in the areas of air, land and sea systems.
• OFB comprises 41 ordnance factories, 9 training institutes, 3 regional marketing centres and 4 regional controllers of safety, which are spread all across the country.
• Currently, the Kolkata-headquartered OFB functions as a department under the Department of Defence Production.
• Every year, 18 March is celebrated as Ordnance Factory Day in India.
• OFB is the world's largest government-operated production organisation, and the oldest organisation in India (Prelims).
• It has a total workforce of about 80,000.
• It is often called the "Fourth Arm of Defence", and the "Force Behind the Armed Forces" of India.
• OFB is the 35th largest defence equipment manufacturer in the world, 2nd largest in Asia, and the largest in India.

Corporatisation of OFB

• Cabinet approved a plan to corporatise the Ordnance Factory Board (OFB), which has 41 factories, into 7 fully government-owned corporate entities on the lines of Defence Public Sector Undertakings (DPSU).
• Once implemented, the OFB, the establishment of which was accepted by the British in 1775, will cease to exist.

Impact of this decision

• It is a major decision in terms of national security and also makes the country self-sufficient in defence manufacturing.

• This move would allow these companies autonomy, as well as help, improve accountability and efficiency.
• This restructuring is aimed at transforming the ordnance factories into productive and profitable assets, deepening specialisation in the product range, enhancing competitiveness, improving quality and achieving cost efficiency.
• All employees of the OFB (Group A, B and C) belonging to the production units would be transferred to the corporate entities on deemed deputation initially for a period of two years without altering their service conditions as Central government employees.
• The pension liabilities of the retirees and existing employees would continue to be borne by the government.

Inland Vessels Bill, 2021

• It will replace the Inland Vessels Act, of 1917. The Bill will regulate the safety, security and registration of inland vessels.
• A key feature of the Bill is a unified law for the entire country, instead of separate rules framed by the States.
• The certificate of registration granted under the proposed law will be deemed to be valid in all States and Union Territories, and there will be no need to seek separate permissions from the States.
• The Bill provides for a central database for recording the details of the vessel, vessel registration, and crew on an electronic portal.
• All non-mechanically propelled vessels will also have to be enrolled at the district, taluk or panchayat or village level.
• It enlarges the definition of ‘inland waters’, by including tidal water limits and national waterways declared by the Central Government.
• It also deals with pollution control measures for Inland Vessels. This Bill directs the Central Government to designate a list of chemicals, substances, etc. as pollutants.