New Delhi: The government has scrapped the subsidy given to fertiliser companies on secondary movement of phospatic and potassic fertilisers from this fiscal, but will provide additional subsidy for movement in hilly states.
"No freight reimbursement shall be made on account of secondary movement of phospatic and potassic (P&K) fertilisers," the Department of Fertilisers said in a notification.
The government provides subsidy to fertilisers companies for transportation of these crop nutrients, as per three components.
The movement of fertilisers from port or plant by rail to various rake points is called 'primary movement' and the cost involved is reimbursed on the basis of railway receipts.
'Secondary movement' is the transportation of fertilizers from the railway rake points to the district headquarters, which was around Rs 300 per tonne and which the government has now scrapped with effect from April 1, 2012.
However, the government will be providing freight subsidy on direct road movement of P&K fertilisers from plant or port to the district headquarters (except single super phosphate) as per the actual distance subject to a maximum distance of 500 km, the notification said.
The distance of 500 km has been fixed for the direct road movement by the government to ensure no loss of business to railways in terms of fertiliser movement.
According to Fertiliser ministry sources, government will also provide additional freight subsidy for Jammu & kashmir, Sikkim, Uttarakhand, Himachal Pradesh, Andaman & Nicobar and the 7 North-Eastern states.
"The government will provide additional subsidy to North East and other hilly states owing to the difficult terrain and high transportation cost as companies are reluctant to move fertilisers there citing under recovery on account of freight and consequential losses," sources added.