Information on Fertilizers in India

Introduction
Fertilizers have played an essential role in agricultural production, providing vital nutrients for
crops, increasing demands over the years. As an agrarian country, India is home to numerous
small and marginal farmers and is often plagued by low productivity and low quality.
Crops are mainly rain-fed and cultivated on a single piece of land over time, decreasing soil
fertility in many regions. Thereby, increasing quantities of nitrogen fertilizers have been used
in the country. Because of this, the Indian government has brought about economic reforms
and has ensured that fertilizers are available at affordable prices to increase productivity.
Due to subsidy eligibility on notified fertilizers, the Indian fertilizer industry has been able to

provide enhanced food security for the country. While agriculture is heavily dependent on the
use of fertilizers, the government has met almost all demand for chemical fertilizers.
Source: https://www.statista.com/topics/7488/fertilizer-industry-in-india/#dossierKeyfigures

The Indian fertilizers market is estimated to record a

CAGR of 11.9% during the forecast period (2021-
2026). The Indian fertilizer market reached a value of
INR 887 Billion in 2020. The rise fertilizer consumption has contributed majorly to the
country's sustainable production of food grains.
In the present scenario, the niti.gov.in states that 56 large plants produce nitrogenous,
phosphatic and complex fertilisers and 72 medium and small fertilizer production units under
the Indian fertilizer industry, which have single super Phosphate (SSP).
The main products manufactured by the fertilizer industry in India are phosphate-based
fertilizers, nitrogenous fertilizers, and complex fertilizers. With its rapid growth, the fertilizer
industry in India is all set to make a long-lasting global impression.
Source: https://business.mapsofindia.com/national-fertilizers/

Fertilizer Production
 Market leaders in fertilizer production
The Indian fertilizer industry comprises of various government and private fertilizer
companies which produce a variety of fertilizers.
Indian Farmers Fertiliser Cooperative Limited (IFFCO), a multi-state cooperative society
headquartered in the nation's capital, is the largest fertilizer manufacturer and marketer. With
an annual installed capacity of over three million tons, National Fertilizers Limited, a state-
owned corporation, was the second-largest producer of urea with a share of about 15 percent
of total urea production in the country.

Leading the phosphatic fertilizer production was Coromandel International Limited, with

nearly three million metric tons of production in 2020. In addition to phosphatic fertilizer,
Coromandel manufactures a wide range of fertilizers, pesticides, and specialty nutrients and is
a leading agricultural solutions provider.
Source: https://www.statista.com/topics/7488/fertilizer-industry-in-india/#dossierKeyfigures

*Financial Year 20XX (1st April 20XX to 31st March 20XX)

 30

25

20
In million metric tons

15

10

0
2017 2018 2019 2020

Production of total fertilizer products at 43.49 million MT during 2020-21 showed an increase
of 1.7% over 2019-20.
While production of N at 13.74 million MT during 2020-21 recorded a marginal increase of
0.2% over 2019-20, P2O5 at 4.74 million MT witnessed a decline of 1.1% during the same
period.
Source: Ministry of Chemicals and Fertilizers:
http://164.100.47.193/lsscommittee/Chemicals%20&%20Fertilizers/17_Chemicals_And_Fertilizers_20.pdf and Fertilizer Association of
India: https://www.faidelhi.org/general/Annual_Report_2020_21.pdf

Domestic fertiliser production reached 28.5 million tonnes during April – December period of
2021-22.
Out of the total fertiliser production, urea output was at 18.7 million tonnes, Di Ammonium
Phosphate (DAP) at 3 million tonne and complex fertilisers at 6.8 million tonnes.
Source: Economic Times: https://economictimes.indiatimes.com/industry/indl-goods/svs/chem-/-fertilisers/fertiliser-subsidy-touches-rs-
85300-cr-in-apr-dec-fy22-survey/articleshow/89247492.cms
Fertilizer Export from India to the World
Fertilizer Export from India Forecast
160

136
140

127.1

117.8
120 123
120

96.8
100 94.1

88.7
In million US $

87
80.5

77.5
75.6
80

60
39.9

40

20

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2 02021
19 22022
020

 Export of Fertilizers in accordance with HS Codes

o Nitrogenous Urea – HS Code: 310210 (Whether or Not in Aqueous Solution)
120 35

30
100

25
80

20
million US $
Million kg

60
15

40
10

20
5

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

o Ammonium Sulphate – HS Code: 310221

 12 4

3.5
10

8
2.5

million US $
Million kg

6 2

1.5
4

2
0.5

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

o Ammonium Nitrate – HS Code: 310230

40 16

35 14

30 12

25 10

million US $
Million kg

20 8

15 6

10 4

5 2

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

o Diammonium Phosphate – HS Code: 310530

 100 45

90 40

80
35
70
30
60
25

million US $
Million kg

50
20
40
15
30
10
20

10 5

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

o Superphosphates, containing 35% or more P2O5 by weight (HS Code:

310311) and Superphosphates, other than P2O5 containing 35% or more by
weight (HS Code: 310319)

o Chemical fertilizer, Potassium Chloride – HS Code: 310420

 25 9

20
7

6
15
5

million US $
Million kg

4
10
3

2
5

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

o Chemical fertilizer, Potassium Sulphate – HS Code: 310430

40 16

35 14

30 12

25 10

million US $
Million kg

20 8

15 6

10 4

5 2

0 0
2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: UN Comtrade: https://comtrade.un.org/data, SEAIR EXIM Solution https://www.seair.co.in/hs-codes/chapter-31-fertilizers.aspx

and World Bank (WITS): https://wits.worldbank.org/trade/comtrade/en/country/IND/year/2018/tradeflow/Exports/partner/ALL/
product/310210

Demand Trends for Fertilizers in India

The Indian fertilizer industry can broadly be divided into two categories, depending on the
nutrient composition:
 Nitrogenous fertilizers
 Phosphatic fertilizers
 Potassic (P&K) fertilizers
The overall fertilizer consumption in India has grown at a CAGR of 2.0% from 50.6 million tons
in FY2009 to 61.4 million tons in FY2020.
In FY2020, the primary sales volumes for fertilizers grew at a moderate rate of 6.0% to 61.4
million t in FY2020 from 57.8 million t in FY2019, following the healthy monsoons.

The
Trend in fertilizer sales volumes (milion MT)
Urea DAP MOP NPKs SSP
70

60 4
4
4
4 4 10
50 9 10
9 9 3
2 3
40 3 3 10
10 10
9 9
30

20
32 32 34
30 30
10

0
FY2016 FY 2017 FY 2018 FY 2019 FY 2020

domestic consumption of urea grew moderately at a CAGR of ~1.3% from 31.9 million tons in
FY2016 to 33.6 million tons in FY2020.

The domestic consumption of non-urea (P&K) fertilizers has been volatile with volumes
fluctuating between 20.6 million tons on the lower side and 31.5 million tons on the higher
side.

However, during FY2020, P&K fertilizer sales volumes reported a 6% growth to 27.8 million
tons, despite imports being lower by 17%.

The imports of DAP and MOP declined 23% and 11% respectively whereas imports of NPK
increased by 16% in FY2020. Domestically manufactured P&K volumes remained stagnant
with a growth rate of ~1% during FY2020.
Source: World Fertilizer Magazine: https://www.worldfertilizer.com/special-reports/24092020/indias-fertilizer-under-pressure/
#:~:text=The%20overall%20fertilizer%20consumption%20in,healthy%20monsoons%20(Figure%201).

*2020 (upto Feb 2021)

Fertilizer Consumption (in million MT)

40

35

30

25
in million metric tons

20

15

10

0
Urea DAP MOP NPKs

According to this data, the average consumption of major chemical fertilizers at the national
level was 135.76 kg/ha in 2015-16 which dropped to 123.41 kg/ha in 2016-17. However, since
then, the consumption has gradually risen to 133.44 kg/ha in 2019-20 at the national level.

Source: Department of Fertilizer: https://pqars.nic.in/annex/253/AU2761.pdf and Factly Media & Research: https://factly.in/data-
chemical-fertilizer-consumption-increased-by-about-16-in-the-last-six-years/

The P&K fertilizer industry is highly dependent on imports, even while India has large
manufacturing capacities of DAP and NPK fertilizers. The MOP is entirely imported. India
imports significant quantities of key raw materials like rock phosphate, phosphoric acid and
ammonia.

Also, with a limited number of global suppliers, the bargaining power of the Indian fertilizer
players with these suppliers is limited to a certain extent. Thus, the industry faces both
availability and pricing issues for key raw materials on a regular basis.
  Imported vs Domesti c mix for key ferti l-
izers in FY20
Domestic Imports
100%
8
90%
27
80%
70% 55

60%
50% 100
92
40%
73
30%
20% 45

10%
0% 0
U r ea D AP NPKs SSP

o Raw material/feedstock

Natural gas is used as feedstock and fuel in the urea sector, forming ~70 – 80% of the cost of
production of urea, depending on feedstock prices and the energy efficiency of the plant. Out of
the 32 urea plants in India, 29 are gas based.

The total gas consumption of all these plants was 42.2 million m3/d in 2019 – 2020, out of
which about 17.3 m3/d is being supplied through domestic sources, and the rest through
imported R-LNG (Re-gasified Liquefied Natural Gas).

With domestic production of natural gas not witnessing material growth and priority of the
allocation of the same being shifted to the city gas distribution.

The share of R-LNG in the overall consumption mix has witnessed an increase over the last
couple of years for the Fertilizer industry.

For FY2020, the share of R-LNG increased to 59%, up from 49% in FY2017. This leads to a
higher urea production cost and hence a higher subsidy burden for the government of India.

Source: World Fertilizer Magazine: https://www.worldfertilizer.com/special-reports/24092020/indias-fertilizer-under-pressure/

#:~:text=The%20overall%20fertilizer%20consumption%20in,healthy%20monsoons%20(Figure%201)

Imports of LNG in India

The oil and gas sector in India are one of its eight core industries. The south Asian country is
the world’s third largest energy and oil consumer after China and the United States. It was also
the fourth largest importer of liquified natural gas globally in 2017.
The import volume of LNG into the country was estimated to be around 26 million metric tons
by the end of fiscal year 2020 (2019-2020)
Source: https://www.statista.com/statistics/715461/india-import-volume-of-liquefied-natural-gas/

in million metric tons

30

25.6

24.9
25

21.7

20.21
20.7
18.8
20
16.1
13.6

13.4
13.3

15
14

10

0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Source: https://www.ppac.gov.in/WriteReadData/userfiles/file/NG-H-LNG%20Import.xls (1 million metric ton = 1325 MMSCM)

In 2021, liquified natural gas (LNG) imported stood at 26,785 MMSCM (21 million metric tons),
with a bill of $9.9 billion
Source: https://www.thehindubusinessline.com/news/as-russia-attacks-ukraine-india-braces-for-high-oil-and-gas-prices-in-2022/
article65081282.ece

India meets half its gas needs through imports by way of liquefied natural gas. Though India
hardly imports LNG from Russia, the crisis has pushed up the fuel prices.

This will raise the cost for the industry and increase inflation. It can impact prices of LPG, CNG,
and electricity as well as have a bearing on the fertiliser industry.

Source: https://chemindigest.com/imports-impacted-due-to-high-global-lng-prices-and-rising-domestic-output/

India accounts for about 0.2% Russia's natural gas exports. GAIL (India) Ltd has a 20-year deal
with Gazprom (Russia) to buy 2.5 million tonnes of LNG a year which started in 2018.

Source: https://www.businessworld.in/article/How-Dependent-Is-World-On-Russia-For-Oil-Gas-And-Coal-/17-02-2022-420815/
According to UN Comtrade Data, India imports from Russia for LNG was:
Commodity Commodity Import Volume
Year Trade Value
Code Name (in tons)
2018 65000 $30.46 million USD
Natural gas,
2019 271111 35884 $26.60 million USD
liquefied
2020 66466.8 $11.65 million USD

Source: https://comtrade.un.org/data/

Fertilizer Subsidy in India

Farmers buy fertilisers at MRPs (maximum retail price) below their normal supply-and-
demand-based market rates or what it costs to produce/import them.

The MRP of neem-coated urea, for instance, is fixed by the government at Rs 5,920 per tonne,
whereas its average cost price payable to domestic manufacturers and importers comes to
around Rs 17,000 and Rs 23,000 per tonne, respectively. The difference, which varies according
to plant-wise production cost and import price, is footed by the Centre as subsidy.

The MRPs of non-urea fertilisers are decontrolled or fixed by the companies. The Centre,
however, pays a flat per-tonne subsidy on these nutrients to ensure they are priced at
“reasonable levels”.

o Payment of Subsidy:
 The subsidy goes to fertiliser companies, although its ultimate beneficiary is the farmer
who pays maximum retail price (MRPs) less than the market-determined rates.
 From March 2018, direct benefit transfer (DBT) system was introduced, wherein
subsidy payment to the companies would happen only after actual sales to farmers by
retailers.
 Each retailer has a point-of-sale (PoS) machine linked to the Department of Fertilisers’
e-Urvarak DBT
 Anybody buying subsidised fertilisers is required to furnish his/her Aadhaar unique
identity or Kisan Credit Card number.
 Only upon the sale getting registered on the e-Urvarak platform can a company claim
subsidy, with these being processed on a weekly basis and payments remitted
electronically to its bank account.
Source: IAS Gyan: https://www.iasgyan.in/daily-current-affairs/fertiliser-subsidy-13 and Section officer: Department of
Fertilizers
Direct Benefit Transfer (DBT)
Under the fertilizer DBT system, 100% subsidy on various fertilizer grades is released to the
fertilizer companies on the basis of actual sales made by the retailers to the beneficiaries.

Sale of all subsidized fertilizers to farmers/buyers is made through Point of Sale (PoS) devices
installed at each retailer shop and the beneficiaries are identified through Aadhaar Card, KCC,
Voter Identity Card etc.

The cost of installation and maintenance PoS devices and other IT related equipment is borne
by the Fertilizer companies. Any company registered under Nutrient Based Scheme (NBS)
Scheme is eligible to get subsidy.

Source: Department of Fertilizer: https://fert.nic.in/dbt and Standing Committee on Chemical & Fertilizer
http://164.100.47.193/lsscommittee/Chemicals%20&%20Fertilizers/17_Chemicals_And_Fertilizers_5.pdf and Section officer: Department of
Fertilizers

The details like time of sale, buyer, quantity Aadhaar number, land records, the health of the
soil and the biometrics proof through the Aadhaar card will be captured in the POS device.

This project aims at providing financial assistance to farmers during the purchase of fertilizers.
It is very difficult for the farmers to spend the money equalising the production cost of
fertilizers. Hence, the central government provides subsidies and reduces the cost of fertilizers
for the farmers.

Source: PM Yojanaye: https://pmmodiyojanaye.in/dbt-direct-benefit-transfer-fertilizer-subsidy-scheme-for-farmers-in-india-registration-

eligibility/

Income Support Scheme – An additional scheme for

farmers
In addition to DBT, farmers also get an income support of Rs. 6000/- per year in three equal
installments under PM KISAN. The funds get transferred directly to the bank accounts of the
beneficiaries. Farmers can use these fund as an additional support to buy household goods and
even farm inputs.
This scheme was initiated by Department of Agriculture & Farmers' Welfare and became
operational from 1.12.2018. It is a s a Central Sector scheme with 100% funding from
Government of India.
Source: PM KISAN Samman Nidhi: https://pmkisan.gov.in/ Section officer: Department of Fertilizers

Total Subsidy allotted by the Indian Government

*1USD = Rs. 76.23 INR
Financial Year Year Subsidy in Billion US $
FY 19 2018 – 19 9.26
FY 20 2019 – 20 10.49
FY 21 2020 – 21 9.35
FY 22 2021 – 22 18.38
FY 23 2022 - 23 13.80
Source: The New Indian Express: shorturl.at/msPX1, Down to Earth: shorturl.at/gAHW0 and Financial Express:
https://www.financialexpress.com/economy/dbt-scheme-for-fertiliser-subsidy-may-be-rolled-out-in-fy22/2174500/

The total subsidy is bifurcated for different projects from which Urea Subsidy and Nutrient
Based Subsidy (NBS) are as follows:

*1USD = Rs. 76.23 INR

Urea Subsidy
2020 – 21 2021 – 22 2022 – 23
In Billion US$ In Billion US$ In Billion US$
Payment for Indigenous Urea 9.026 6.377 6.112
Payment for Import of Urea 3.286 4.755 2.701
Direct Benefit Transfer
0.0013 0.0036 0.0020
(DBT) in Fertiliser Subsidy
Nutrient Based Subsidy
Payment for Indigenous P
2.923 5.124 3.305
and K Fertilizers
Payment for Imported P and
1.969 3.291 2.203
K Fertilizers

o Payment for Import of Urea:

 Because domestic output is insufficient to fulfil the need for fertilisers, imports
are planned to make up the difference. The cost is generally the price of
imported fertilisers plus the cost of handling and distribution of the fertilisers.
 The Fertilizer Control Order regulates the selling price of imported fertilisers to
farmers.
  This selling price to the farmers is the same as the selling price for indigenous
production.
 The difference between the amount realised from the sale of fertilisers to
farmers and the import expenses indicates the fertiliser import subsidy that is
given to the importer by the government.
o Payment for Imported P and K Fertilizers:
 Provision is for payment to the importers of fertilizers/agencies under the
Nutrient Based Subsidy (NBS) scheme on the sale of Phosphatic and Potassic
fertilizers at concessional rate to the farmers.
Source: Indian Budget: Department of Fertilizers: https://www.indiabudget.gov.in/doc/eb/sbe6.pdf and Section officer: Department of
Fertilizers