MUMBAI, March 28 India has cut potash subsidy by nearly a fifth to 9,400 rupees ($160) per tonne for the year starting April in an effort to contain a ballooning fiscal deficit, a government source and an industry official told Reuters.
A smaller subsidy would keep retail potash prices elevated despite a drop in overseas prices, dashing any hopes for a recovery in demand in one of the world's top importers of the fertiliser that global miners are banking on to counter a slump in prices.
"The (federal) Cabinet on Thursday approved reduction in subsidy to 9,400 rupees," said a government official, who declined to be identified.
India relies on imports to meet its entire potash demand. It has accounted for about a tenth of global shipments over the past five years, but its share has been slipping as local prices rise due to subsidy cuts and a weaker rupee.
Reuters exclusively reported last month that India will cut potash subsidy by nearly a fifth.
Potash imports deals for 2014/15 can be signed soon as the government has fixed subsidy for the next year, said P.S. Gahlaut, managing director of Indian Potash Limited, the country's biggest importer.
India is expected to buy 3.5 million tonnes of potash for the next financial year, Gahlaut had said earlier this month.
Major potash suppliers to India include Russia's Uralkali , Potash Corp, Mosaic Co, Agrium Inc, Arab Potash Co, Israel Chemicals and Germany's K+S AG. ($1 = 60.2150 Indian Rupees) (Reporting by Rajendra Jadhav; Editing by Subhranshu Sahu)