KOLKATA (miningweekly.com) – India’s potash imports are expected to fall by an estimated 5% during the current financial year, as a result of a combination of higher global prices, a spike in the domestic retail price of the nutrient and the impact of the country’s reformed indirect taxes.
Officials in designated import agencies said that while the entire domestic demand for the soil nutrient was met through imports, total inward shipments in 2017/18 were forecast to be at least 5% lower than the four-million tons imported during the previous financial year.
Indian government-owned trading firms, MMTC and STC, along with India Potash, are the sole authorised agencies entitled to import potash into the country.
The officials pointed out that the first dampener on import volumes was the sharp recovery in international prices of potash. Reversing the slump last year, international potash prices have recovered to within a range of $230/t to $240/t free-on-board, which, coupled with India’s new indirect tax regime and cuts in subsidies, would spike the retail price of the soil nutrient and depress demand during the ongoing sowing season, the officials added.
India’s reformed indirect tax regime, the Goods and Services Tax (GST) which kicks in on July 1, has slotted fertilisers under the 12% tax bracket. This is almost double the 1% tax, plus value-added tax up to 5%, at present.
The unveiling of GST later this week is aimed to usher in a uniform indirect tax regime across all provinces. Goods have been put under four tax rates of 5%, 12%, 18% and 28%, with the bulk of services being put under the 18% tax rate.
Importers said that they are yet to calculate the impact of high international prices and GST on retail prices but it is expected to be significant; more so since the government at the same time has reduced the subsidy payable to importers which enabled them to retail the fertiliser at a lower price than notified by the government.
For the current financial year, the government reduced the subsidy to about $116/t, against the $145/t paid last year.