As China chokes the tap, Saudi emerges as India's fertiliser ally
Coal India Ltd
(CIL), for the annual supply of 3.1 million metric tonnes of DAP for five years, with the option to extend the arrangement by another five years with mutual consent. These agreements were signed during Union minister for chemicals and fertilisers J P Nadda's ongoing 'landmark' visit to Saudi Arabia.
Indian officials said the deal significantly increases the availability of DAP, the second most used fertiliser in India after urea, and contributes to the country's goal of food security over the medium to long term. India has traditionally depended on countries like China for DAP imports, and the government has been looking to diversify its sourcing to reduce dependency.
Without naming China, a government source told ToI that 'at a time when some countries are showing a restrictive approach in fertiliser supply, the commitment from Riyadh demonstrates that India's friends and partners continue to work closely to deliver requirements and collaborate on future investments.'
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The visit by Minister Nadda comes just months after Prime Minister Narendra Modi's State Visit to Jeddah in April and has provided fresh momentum to the growing strategic partnership between India and Saudi Arabia.
'Both sides underscored their commitment to broadening the scope of bilateral relations to include other key fertilisers such as urea along with DAP, aiming to ensure India's fertiliser security. Talks were also held on facilitating mutual investments, with a focus on exploring opportunities for Indian PSUs to invest in Saudi fertiliser sector, and reciprocally, Saudi investments in India,' an official said.
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The India-Saudi agreement comes at a time when India is facing headwinds in its fertiliser imports from China.
According to a report in The Economic Times, China has halted specialty fertiliser exports to India for two months now, forcing Indian companies to turn to Europe, Russia, and West Asia for alternative sources of raw materials — at significantly higher costs. Industry insiders told ET that China had been the preferred source due to higher availability, shorter sailing time, and more affordable prices.
'Imports from China were cheaper, and imports from other countries are at 15–20% higher prices already,' said Yogesh Chandra, vice president at Transworld Furtichem, maker of the Nutrifeed brand of fertilisers.
Due to the disruption, around 80,000–100,000 tonnes of raw materials are expected to be imported from alternate sources to make up for the estimated 150,000–160,000 tonnes of speciality fertilisers stuck at Chinese ports. While there is no official export ban in place, Chinese authorities have stopped inspecting consignments bound for India — a mandatory step for export clearance — effectively halting shipments. Meanwhile, China continues to export these fertilisers to other countries. India depends on China for around 80% of its specialty fertiliser imports.
The alternative imports are not only more expensive due to limited availability but also burdened by higher shipping costs. Industry players expect prices to rise further, particularly for key nutrients like mono ammonium phosphate (MAP) and calcium nitrate (CN).
'The prices are going to go higher as Russia also has a limited supply,' said Sanket Pawar of Aries Agro, a manufacturer of micronutrients.
As MAP supply from Russia remains tight, companies are exploring imports from Morocco. While Israel is another potential supplier, many importers are currently avoiding it due to the ongoing conflict in West Asia, insiders told ET.
The tightening fertiliser trade also reflects a larger pattern in China's export behaviour. Beijing has been selectively restricting exports of critical materials, such as rare earth magnets, where it controls about 90% of global output, in apparent response to US tariffs and curbs. India, for its part, has imposed restrictions on Chinese firms' access to its domestic markets and now requires prior government approval for investments from countries with which it shares a land border. The result has been escalating friction in critical sectors, including fertilisers.
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