Bad Dürkheim What is in news : The Union government  extended the subsidy benefits under the amended New Investment Policy 2012 to Ramagundam Fertilisers and Chemicals Ltd (RFCL), located in Telangana.

Kearney NEW INVESTMENT POLICY FOR UREA 2012

• The Government had announced New Investment Policy (NIP) – 2012 on 2nd January, 2013 and its amendment on 7th October, 2014
• The commercial production of CFCL-III started on 1st January, 2019.

New urea policy:

• It aims to entice fresh investment of about Rs.35,000 crore to boost domestic production by 8 million tonnes.
• 12-20 % post-tax return will be given by the government on fresh capital infused by the manufacturers for establishing new plants as well as for expansion and refurbishment of the existing ones.
• To ensure this return, the government would cover the entire cost of natural gas, which is the main feedstock of urea, and accounts for 80 % of the cost.
• Urea sector is controlled by the government and it has fixed the maximum retail price (MRP) at Rs.5,360 a tonne.
• The difference between the MRP and the cost of production is given as subsidy to manufacturers.
• The government has set a floor and ceiling price of urea, based on the price of natural gas plus 12-20 per cent equity returns in order to determine the cost of production of new plants to be established after the policy comes into effect.