Page 333 - Low Carbon Development in China and India
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be spent on infrastructure development under the Eleventh Five-Year
Plan (2007–12). Further, infrastructure projects such as the dedicated
freight corridors, upgraded and new airports and ports are expected
to enhance the scale of economic activity, leading to a substantial
increase in cement demand. Measures to upgrade existing plants and
research in new technologies include funding from a corpus of clean
energy fund, for cement sector, for development of processes for using
alternate fuel and municipal and solid waste and energy efficient
technologies (Twelfth Five-Year Plan 2012–17).
Fertilizer
The fertilizer sector attracted large investment during the 1970s
and 1990s. However, there has been hardly any investment during
the Tenth and Eleventh Five Year Plans. The total investment in the
fertilizer sector by the end of 2010–11 was INR 27,247 crore (approx.
USD 4.54 billion). With the accelerated growth in the Indian economy,
other sectors had high rates of return on investment, but the fertilizer
sector has failed to attract more investment due to low returns. To
increase the capacity of urea by about 12 million tonnes to a total
of 33.7 million tonnes by 2016–17, India will need to invest at least
INR 40,000 crore (approx. USD 6.66 billion) in the sector at current
capital costs.
In the context of rapidly increasing foodgrain production in the
country, suitable amendments to the new investment policy in the
urea sector are required for creating a conducive incentive-based
environment for new investments in the urea sector. Besides this,
investment in potash and phosphate assets/ mines for raw materials
and joint ventures for finished fertilizers is required to ensure long‐
term supply of P and K fertilizers.
The new investment policy declared in 2008 needs to be made
more investor friendly. There is a need to attract new investments to
special economic zones where fiscal benefits are provided. Besides
fiscal benefits (including exemptions from various taxes and duties),
the fertilizer industry could be provided incentives in the form of:
(i) viability gap funding for investment in new projects, (ii) facilitating
long-term contracts for gas, and (iii) securitization of subsidy
receivables to ensure regular cash flow.
The New Pricing Scheme-III is aimed at promoting further
investment in the urea sector to maximize urea production from
the existing urea units, including through conversion of non-gas
based units to gas, incentivizing additional urea production, and
298 Low Carbon Development in China and India
Plan (2007–12). Further, infrastructure projects such as the dedicated
freight corridors, upgraded and new airports and ports are expected
to enhance the scale of economic activity, leading to a substantial
increase in cement demand. Measures to upgrade existing plants and
research in new technologies include funding from a corpus of clean
energy fund, for cement sector, for development of processes for using
alternate fuel and municipal and solid waste and energy efficient
technologies (Twelfth Five-Year Plan 2012–17).
Fertilizer
The fertilizer sector attracted large investment during the 1970s
and 1990s. However, there has been hardly any investment during
the Tenth and Eleventh Five Year Plans. The total investment in the
fertilizer sector by the end of 2010–11 was INR 27,247 crore (approx.
USD 4.54 billion). With the accelerated growth in the Indian economy,
other sectors had high rates of return on investment, but the fertilizer
sector has failed to attract more investment due to low returns. To
increase the capacity of urea by about 12 million tonnes to a total
of 33.7 million tonnes by 2016–17, India will need to invest at least
INR 40,000 crore (approx. USD 6.66 billion) in the sector at current
capital costs.
In the context of rapidly increasing foodgrain production in the
country, suitable amendments to the new investment policy in the
urea sector are required for creating a conducive incentive-based
environment for new investments in the urea sector. Besides this,
investment in potash and phosphate assets/ mines for raw materials
and joint ventures for finished fertilizers is required to ensure long‐
term supply of P and K fertilizers.
The new investment policy declared in 2008 needs to be made
more investor friendly. There is a need to attract new investments to
special economic zones where fiscal benefits are provided. Besides
fiscal benefits (including exemptions from various taxes and duties),
the fertilizer industry could be provided incentives in the form of:
(i) viability gap funding for investment in new projects, (ii) facilitating
long-term contracts for gas, and (iii) securitization of subsidy
receivables to ensure regular cash flow.
The New Pricing Scheme-III is aimed at promoting further
investment in the urea sector to maximize urea production from
the existing urea units, including through conversion of non-gas
based units to gas, incentivizing additional urea production, and
298 Low Carbon Development in China and India
