The ministry has emphasised the need for setting up joint ventures abroad as the country is totally dependent on import of MOP. Similarly, joint ventures for urea, DAP and phosphoric acid would be treated not merely as cases of setting up of capacities abroad but as "conscious and notional additions made to indigenous capacities in the larger national interest."The government may give tax benefits to Indian sponsors subject to some conditions. Imports from joint ventures would be used for containing market prices which are expected to settle at higher levels in the post-decontrol scenario especially in areas that are deficit in fertilisers.

However, the government would not involve itself in purchase agreements or other treaties between Indian firms/sponsors and their foreign counterparts except in cases where prior commitments have been made.The policy paper has recommended that the feasibility of adopting coal-based technology should be explored in order to reduce the dependence on imports for feedstock.

The Centre has decided not to encourage capacities for production of urea in the country till the year 2003-04 other than fertiliser projects in the public and cooperative sector which have already received in principle approval.The ministry has said that the total decontrol would result in a high rise in the price of fertilisers "which the farmers, especially the small and marginal ones, may not be in a position to afford." As many as 70 per cent of the fertiliser is being used in 100 out of 426 districts chiefly on irrigated cereal crops, sugarcane and cotton.During the first of 2000-01 and 2001-02, the ministry has decided to emphasise on removal of aberrations in the existing system and initiation of steps towards systematic reforms that would lead to total decontrol in the long run.The ministry has suggested reasessment of capacity and modulation of offtake depending on demand.

The issue of excess drawal of subsidy by certain urea manufacturing units on account of under-statement of capacity had figured prominently. According to the high-level committee headed by Dr YK Alagh, the interim reassessment would result in a savings of Rs 450 crore annually.The ministry has suggested that the urea prices be increased at regular intervals. "The need for it is obvious as the urea price in India was the cheapest in December 1998 in dollar terms, being $88.14 per tonne as against that of $119.32 in Bangladesh, $191.31 in Malaysia, $160 in Pakistan and $174.26 in Thailand."

The ministry has called for introduction of uniform normative referral price (NRM) based on long run marginal cost (LRMC) methodology in a bid to make urea producing units compete with each other by way of cutting costs, improving energy efficiency. According to the ministry, the removal of distribution controls on urea would lead to a saving of not less than Rs 700 crore in freight subsidy for transportation of urea.During second phase (2002-03 - 2003-04), the ministry has emphasised the need for release of the long-term policy for LNG in the fertiliser sector to bring in stability and attract investment in this sector. During third and concluding phase (2004-05 - 2006-07) before total decontrol, the ministry has stressed the need on structural improvements in the agricultural sector and improvement of the non-farm rural sector.