* Subsidy cut to keep local price elevated, reduce demand
* Uralkali reps in India now to finalise 1 mln tonnes in
* India to import 3.5 million tonnes potash in 2014/15
(Adds quotes, details)
By Rajendra Jadhav
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 on Friday.
A smaller subsidy would keep retail potash prices elevated
despite a drop in overseas prices, dashing hopes for a recovery
in demand in one of the world's top importers of the fertiliser.
Global miners have been banking on Indian imports to help
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 overseas supplies 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
the potash subsidy by nearly a fifth.
Retail potash prices in India have doubled since 2011 to
17,000 rupees a tonne as India cut subsidies in the last two
years - including a 21.5 percent reduction in 2013/14 - and due
to a weak currency.
"Since the government can't reduce subsidy for urea, it
chose potash. Now fertiliser companies are not in position to
pass on the drop in global prices to farmers," said an official
with a private fertiliser company based in Mumbai.
Nitrogenous fertiliser urea is the most used and politically
sensitive fertiliser in the country.
Global potash prices have fallen more than 20 percent to
around $310 per tonne since Russia's Uralkali, broke
away from trading venture Belarusian Potash Company (BPC) in
Higher Indian purchases would allow potash prices to
rebound, but now that seems unlikely, the fertiliser company
India's potash imports would remain largely steady around
3.5 million tonnes in 2014/15 due to the subsidy cut, P.S.
Gahlaut, managing director of Indian Potash Limited, the
country's biggest importer, said this month.
Potash imports deals for 2014/15 year starting from April
can be signed in a week as the government has fixed the subsidy
for the next year, Gahlaut said on Friday.
A team of Uralkali's sales officials is in India to finalise
deals for over 1 million tonnes, a senior fertiliser industry
Apart from Uralkali, India buys potash from Potash Corp of
Saskatchewan Inc , Mosaic Co, Agrium Inc
, Arab Potash Co, Israel Chemicals
and Germany's K+S AG.
India has been trying secure potash at the same price China
bought from global suppliers earlier this year, Gahlaut said.
Uralkali, the world's top potash producer, has agreed to
sell 700,000 tonnes of potash to China at a price of $305 per
tonne on a cost and freight (CFR) basis in the first half of
(Reporting by Rajendra Jadhav; Editing by Tom Hogue)