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Mint
a day ago
- Business
- Mint
Mint Primer: What India is now doing to avoid a fertilizer shock
Last week, three Indian fertilizer firms signed a long-term supply contract with a Saudi Arabian firm for diammonium phosphate (DAP)—a critical crop nutrient. Mint looks at the significance of this deal and what India is doing to ensure enough supplies of fertilizers. Is India self-sufficient on the fertilizer front? No. According to official data, India, at an overall level, produces about 84% of the total fertilizer it consumes. A deeper look at the numbers reveals the true picture. For urea, domestic production accounts for 77% of the nation's demand. In the case of NPK (nitrogen-phosphorus-potassium) fertilizers, it is 84%. But when it comes to DAP, the second-most used crop nutrient after urea, the local production covers just 40% of the 10-million-tonne annual demand. In the case of muriate of potash (MoP), a potassium-based nutrient essential for plant growth, 100% of the consumption is imported. Where is the shortfall sourced from? India is the second-largest consumer of fertilizers in the world after China. To meet the demand-supply gap, India imports the critical crop nutrients from many countries. Russia has, in recent years, become its main source. It now accounts for 22.4% of India's imports as per figures available for the year 2024-25. Saudi Arabia comes next, followed by Oman, China and Morocco (see chart). That apart, India is almost entirely dependent on imports for the raw materials that go into producing fertilizers. It imports all of its potash needs, 90% of rock phosphate and most of its sulphur requirements. Is India impacted by China's export restrictions? In recent months, China has imposed limits on exports of DAP and other fertilizers. This has created unease across the world and pushed up prices. The cost of imported DAP has risen from around $630 per tonne a year ago to $800 now. India, to be sure, has cut its dependence on China for fertilizers from 46% of total imports in 2015-16 to 10.5% now. Why are fertilizers so critical to India? Agriculture accounts for 12% of India's economy and employs 45% of its workers. The share of agricultural in India's total exports is 14%. A vibrant farm sector is critical to a strong economy as a fall in agricultural output can cause food prices to rise, fuel inflation and smother rural consumption. To ensure that this does not happen, the fertilizer sector is strongly regulated. The government decides the production, supply, prices and even the margins of fertilizer companies. How is India reducing its vulnerability? India has been diversifying its fertilizer imports to shield itself from geopolitical shocks. It has sealed long-term supply deals for both fertilizers and their raw material. Last week, three Indian companies—Indian Potash Ltd, Kribhco and Coromandel International Ltd—signed a five-year agreement with Ma'aden, Saudi Arabia's state-owned mining and mineral major, for supply of 3.1 million tonnes of DAP annually from 2025-26 onwards. This deal partly makes up for the reduction in DAP imports from China.
Time of India
2 days ago
- Business
- Time of India
As China chokes the tap, Saudi emerges as India's fertiliser ally
India and Saudi Arabia have signed long-term agreements for the supply of diammonium phosphate (DAP) fertiliser, marking a significant development in efforts to enhance the country's fertiliser security. Leading Saudi mining firm Ma'aden has entered into agreements with Indian companies, Indian Potash Ltd (IPL), KRIBHCO, and 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.' by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Secure Your Child's Future with Strong English Fluency Planet Spark Learn More Undo 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. Live Events 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.
Mint
2 days ago
- Business
- Mint
Three Indian firms sign long-term DAP fertilizer supply pact with Saudi's Ma'aden
New Delhi: Three Indian companies signed long-term agreements with Saudi Arabian state-owned Ma'aden to raise the supply of diammonium phosphate. Indian Potash Ltd, Krishak Bharati Cooperative Ltd (Kribhco) and Central Insecticides Laboratory signed long-term agreements with Ma'aden to raise the supply of diammonium phosphate (DAP) fertilizer to 3.1 million tonnes per annum for five years starting FY26 during the visit of Union minister J.P. Nadda to the West Asian nation, according to a statement on Sunday. Nadda is the minister for health and family welfare, and chemicals and fertilizers. In FY25, India's imports of DAP fertilizer from Saudi Arabia were about 1.9 million tonnes, around 17% over the 1.6 million tonnes imported during FY24, the statement said. The agreements will extend for a period of five additional years with mutual consent, the statement from the chemical and fertilizer ministry said. About 10-11 million tonnes of fertilizer is required for India's domestic demand each year, with about 60% dependent on imports. Fertilizer imports assume importance due to the crucial subsidy, particularly DAP, which the union government provides under the Nutrient Based Subsidy scheme. In FY25, India's imports of DAP fertilizer from the Saudi Arabia were about 1.9 million tonnes, around 17% over the 1.6 million tonnes imported during FY24, the statement said. Nadda met with the Saudi Arabian minister of industry and mineral resources, Bandar bin Ibrahim Al Khorayef, in Riyadh on Sunday to discuss partnerships in fertilizers, petrochemicals, and pharmaceutical sectors, the statement said. The two ministers discussed further investments by Indian state-owned companies in Saudi Arabia in the fertilizer sector, and Saudi investments in India. India's fertilizer secretary and the vice-minister for mining affairs for Saudi Arabia in its ministry of industry and mineral resources also created a joint team to explore long-term collaboration in the sector. Nadda also met with his Saudi Arabian health minister on Sunday to discuss co-operation in the medical sector, health services, pharmaceuticals, digital health solutions, and knowledge exchange. During prime minister Narendra Modi's visit to Saudi Arabia in April this year, the two nations extended the memorandum of understanding on cooperation in the field of medical products regulation between the Saudi Food and Drug Authority and Central Drugs Standard Control Organization for five years, according to a statement by the ministry of external affairs.
