Centre approves Policy for reimbursement of Freight Subsidy for transportation of Fertilisers through Coastal Shipping

NEW DELHI: A policy for reimbursement of freight subsidy for transportation of fertilisers through the coastal shipping route has been approved. Earlier, this financial support was available only for fertiliser movement via railways. The move by the Department of Fertilisers means reduction in freight by about 40 per cent.

“Only movement of subsidised indigenous fertilisers — urea and phosphatic and potassium (P&K) fertilisers — through coastal shipping/inland waterways will be eligible for the payment of freight subsidy at this stage,” the policy said.

In case of single mode or multi-modal transportation of fertilisers, which includes coastal shipping, the freight subsidy will be restricted to the railway charges, or the actual freight incurred, whichever is less.

The proposal for including coastal shipping/inland waterways as modes for fertiliser transportation, as well as the related subsidy, was mooted by the Ministry of Shipping last year.

Experts believe the move will help in significant reduction in cost of transportation, time and is environment friendly.

According to industry figures, about 24.2 million tonnes (mt) of urea and 25 mt of other fertilisers (phosphatic and potassium) were transported in the country in 2017-18. The shipping ministry is estimating movement of about 9-10 million tonnes of fertiliser through coastal and inland waterways a year by 2025, which could save around Rs 900-1,000 crore per annum in freight cost.

This decision would promote transportation of fertilisers through coastal shipping under the ministry’s flagship Sagarmala programme.

Currently, India imports 28 mt of finished fertilisers and raw materials with Andhra Pradesh, Gujarat, and Odisha being the biggest clusters. Soil nutrients constitute about 2 per cent of the total cargo handled at the ports in India.

Coastal shipping and inland waterways currently form around 7 per cent of the total modal mix in India, compared to 10-20 per cent for other emerging markets.

Fertiliser corporations with multiple plant locations across the country seem to have the highest potential to leverage coastal shipping (example Iffco and Rashtriya Ispat Nigam).