The Indian government this week announced it would start closing its state-owned trading companies STC and MMTC. The announcement said the closing would take place one at a time without a specified timetable. The first to go is expected to be STC. The trading house showed losses in the 2018/19 fiscal year exceeding US$124 million.
The closing of MMTC as a state-owned enterprise will come in steps, according to Indian media reports. The plan announced so far will reduce the government’s stake in MMTC from 90 percent to 75 percent. Other reports indicated the government may move to completely divest itself of MMTC.
International traders called the announcement significant. Currently all urea for agriculture use is imported by MMTC, STC, and IPL. So far this year only MMTC has been importing urea. Urea, unlike phosphates and potash, is heavily subsidized and remains a politically volatile commodity. Efforts to lower subsidies or to move urea sales to a market-based system have been met with opposition from farmers and agriculture groups in the country. One source told Green Markets the move could open a window of opportunity for private-sector companies to import urea. Given the political nature of urea imports, however, the government will most likely remain involved in the urea market.