What challenges does India face in fertilizer imports?

04-11-2024

In November 2024, India is facing rising fertilizer prices, worsened by ongoing conflicts in Ukraine and Gaza.
Experts worry that these situations will lead to higher costs for raw materials used in fertilizers.
A Senior Economist from the Food and Agriculture Organization recently emphasized the need for India to boost its fertilizer production.
In Uttar Pradesh, India’s largest food grain-producing state, officials reported they have enough fertilizer for only ten more days, just as the winter crop planting season begins.

Macro & Micro Elements in Fertilizers

Macro Nutrients:

Nutrients required in larger amounts for plant growth.
Key Macro Nutrients:
1. Nitrogen (N): Essential for vegetative growth and leaf development.
2. Phosphorus (P): Important for root development and flowering.
3. Potash (K): Aids in water regulation and overall plant health.
4. Calcium: Crucial for cell wall structure and growth.
5. Sulfur (S): Involved in protein synthesis and enzyme function.
6. Magnesium: Central component of chlorophyll; important for photosynthesis.

Micro Nutrients

Nutrients required in smaller quantities but still vital for plant health.
Key Micro Nutrients:
1. Iron (Fe): Essential for chlorophyll synthesis.
2. Zinc (Zn): Important for enzyme function and growth regulation.
3. Copper: Involved in photosynthesis and respiration.
4. Boron: Critical for cell wall formation and reproductive growth.
5. Manganese: Plays a role in photosynthesis and nitrogen metabolism.
6. Molybdenum: Important for nitrogen fixation in legumes.
7. Chloride: Involved in osmosis and photosynthesis.

Common Fertilizers:

NPK Fertilizers: The most common type, providing a balanced supply of nitrogen, phosphorus, and potassium.
Urea: The most widely used fertilizer in India, primarily providing nitrogen.

Fertilizer Consumption in India

Rank: 2nd-largest consumer of fertilizers globally.
Annual Consumption: Exceeds 55.0 million metric tons.

Fertilizer Import Overview:

Although new data on fertilizer imports is not yet available, a report from the Standing Committee of Parliament on Chemicals and Fertilizers highlighted key issues in August 2023.
The report noted that India’s fertilizer production does not meet demand, leading to heavy reliance on imports. Specifically:
1. Urea: 20% of what is needed comes from imports.
2. Diammonium Phosphate (DAP): 50-60% is imported.
3. Muriate of Potassium (MOP): 100% of this is imported.

Changes in Fertilizer Production:

In the agricultural year 2021-22, India consumed about 579.67 lakh metric tonnes (LMT) of major fertilizers:

Urea: 341.73 LMT
DAP: 92.64 LMT
MOP: 23.93 LMT
NPK (Nitrogen, Phosphorus, Potassium): 121.37 LMT

In comparison, total fertilizer use in 2020-21 was higher, at around 629.83 LMT. In 2021-22, India produced 435.95 LMT of fertilizers, resulting in a shortfall of 143.72 LMT compared to what was needed.

Production Statistics: in 2021-22,

Urea: 250.72 LMT
DAP: 42.22 LMT
NPK: 89.67 LMT
Single Super Phosphate (SSP): 53.34 LMT

From 2014-15 to 2021-22, production only increased by about 50 LMT, showing slow growth.

Subsidies and Budget Allocations:

For the fiscal year 2023-24, the Indian government has set aside ₹1.79 lakh crore for fertilizer subsidies:

Indigenous P&K Fertilizers: ₹25,500 crore
Imported P&K Fertilizers: ₹18,500 crore
Indigenous Urea: ₹1,04,063.20 crore
Imported Urea: ₹31,000 crore

Global Factors Impacting Imports

The crises in Ukraine and Gaza are making fertilizer markets unstable.
This could lead to higher oil prices, which would increase fertilizer production costs.
In the past, India’s fertilizer imports mostly came from countries like:
1. China
2. Russia
3. Saudi Arabia
4. UAE
5. Oman
6. Iran
7. Egypt

The ongoing conflicts in these regions could severely affect India's ability to import fertilizers.

Recommendations for Improvement:

Experts suggest several ways for India to improve its fertilizer situation:

Boost Production: Increase domestic fertilizer manufacturing.
Alternative Farming Methods: Use alternatives like nano urea and natural farming to reduce reliance on traditional fertilizers.
Encourage Investment: Create policies that support investments in the fertilizer industry.

The Standing Committee also stressed the need for policies that attract investment in fertilizer production. Since a new investment policy started in 2012, six new urea plants have opened, adding 76.2 LMT to annual production capacity.

India currently has 36 working urea manufacturing units.

Conclusion

India faces significant challenges with fertilizer imports due to rising prices and a heavy reliance on foreign sources. To ensure food security and lessen vulnerability to global market changes, it is crucial for India to boost domestic production and explore alternative farming practices.