Why is it in the news?

• India’s dependence on fertilizer imports is facing significant challenges due to the ongoing crises in Ukraine and Gaza, which have driven up the prices of raw materials for petroleum-based fertilizers. This situation has raised concerns among policymakers about the sustainability of fertilizer supplies.
• Recently, a Senior Economist from the FAO highlighted the urgent need for India to bolster its fertilizer production capacity. In Uttar Pradesh, a key food-grain-producing state, the Agriculture Minister warned that the available fertilizer stock may last only ten more days, a critical issue as the sowing season for winter rabi crops is underway.
• Essential fertilizers such as Diammonium Phosphate (DAP) and NPK (Nitrogen, Phosphorus, and Potassium) are crucial for crop growth during this period.

Current Fertilizer Import Scenario

• Although the Ministry has yet to release updated import data, an August 2023 report from the Parliamentary Standing Committee on Chemicals and Fertilizers raised alarms about India’s fertilizer production capacity falling short of demand.
• The report indicated that approximately 20% of India’s urea requirement, 50-60% of its DAP need, and 100% of its Muriate of Potash (MOP) demand are fulfilled through imports, emphasizing India’s heavy reliance on foreign sources for essential fertilizers.

Trends in India’s Fertilizer Production

• In the fiscal year 2021-22, India consumed around 579.67 lakh metric tonnes (LMT) of fertilizers, including 341.73 LMT of urea, 92.64 LMT of DAP, 23.93 LMT of MOP, and 121.37 LMT of NPK. The total production for that year was 435.95 LMT, leading to a shortfall of 143.72 LMT.
• Despite a gradual increase, urea production remains insufficient, with 250.72 LMT produced against a consumption of 341.72 LMT in 2021-22. Furthermore, while MOP is not manufactured domestically, the production of other fertilizers like DAP, NPK, and Single Super Phosphate (SSP) has also seen limited growth.
• In the 2023-24 budget, the fertilizer subsidy allocation reached ₹1.79 lakh crore, with substantial amounts designated for both indigenous and imported fertilizers.

Impact of the Ukraine and Gaza Crises

• The fertilizer market is likely to remain unstable due to the crises in Ukraine and Gaza, which primarily affect oil prices, a critical factor influencing fertilizer costs. India typically imports fertilizers from nations such as China, Russia, Saudi Arabia, the UAE, Oman, Iran, and Egypt.
• The escalating conflicts in Ukraine and West Asia pose potential threats to these import channels, raising concerns about the stability of India’s fertilizer supply.

Strategies for Reducing Dependency on Imports

• Experts recommend that India enhance its fertilizer production capacity and reduce dependence on imports. Proposed strategies include utilizing nano urea, advocating for natural farming practices, and increasing domestic fertilizer manufacturing capabilities.
• The Parliamentary Standing Committee has also called for policy reforms to attract investments in fertilizer production from public, cooperative, and private sectors.

Progress and Initiatives

• The investment policy introduced in 2012 has facilitated the establishment of six new urea plants, each with an annual capacity of 12.7 LMT, contributing a total of 76.2 LMT to urea production.
• Currently, there are 36 operational urea manufacturing units, with four recently revived facilities in Ramgundam, Gorakhpur, Sindri, and Barauni, now equipped with modern gas-based greenfield technology, marking a positive step toward enhancing domestic production.