Fertiliser industry was developed as part of planned economy along with other basic industries like steel, refineries and engineering where large investment was required. Initially, manufacturing facilities were built up mainly in public sector. However, gradually promoters from private sector also made investment in fertiliser production capacities incentivized by attractive pricing policies. Government of India formulated and implemented a pricing policy in 1970s which guaranteed 12% return on net worth. This was done to enhance domestic production of fertilisers in wake of increasing demand of fertilisers after green revolution. The policy also provided for controlled selling pricing of fertilisers to the farmers to induce consumption for higher agricultual production. The policy was successful on both fronts that is, in increasing fertiliser consumption and hence agricultural productivity and also increasing the production capacity manifold.
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