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Economic Times
5 days ago
- Business
- Economic Times
Dependent on China, drowning in red tape: How a broken policy regime is killing India's small fertiliser manufacturers
iStock India imports roughly 20% of urea, 50-60% of DAP, 80% of specialty fertiliser, and 100% of MOP. Small is beautiful—but not always. Take the micro, small, and medium-sized enterprises (MSMEs) in India's fertiliser industry, for instance—more specifically, the smaller units engaged in the manufacturing of specialty fertilisers. Many of them are even on the verge of collapse as they grapple with mounting pressure from rising imports, regulatory burden, and high input costs. India, an agricultural-dependent economy, relies significantly on imports to fulfil its fertiliser needs, even though domestic production has increased to 503.35 lakh tonnes in 2023-24 from 425.95 lakh tonnes in 2019-20. And its top suppliers are China, Russia, Saudi Arabia, Oman, and the US. According to industry sources, the country imports roughly 20% of urea, 50-60% of DAP (Di-ammonium Phosphate), 80% of specialty fertiliser, and 100% of MOP (Muriate of Potash). Additionally, it also imports other fertilisers like NPK compounds and raw materials like phosphate rock and sulphur for DAP production. Recently, China, which accounts for nearly 80% of India's specialty fertiliser imports, imposed restrictions on exports. It has also suspended export permits for DAP since mid-2023. For India, this is a chance to augment its domestic capacity and become self-reliant in fertiliser. While the disruption in imports has highlighted the vulnerabilities in the supply chain, the 'ongoing preference for imports' in policy frameworks, as per local manufacturers, has impeded the growth of India's domestic specialty fertiliser players. According to them, subsidies and preferential trade rules for imported fertilisers have created an uneven playing field. According to industry estimates, India imported 150,000-160,000 tonnes of specialty fertilisers during the June-December 2024 period, with China supplying 70-80%. Although specialty fertilisers represent a small percentage of overall demand, their popularity is rapidly increasing, as they offer customised nutrient delivery that caters to specific crops, soil types, and growth stages. They improve crop yields and quality while minimising ecological impact by increasing nutrient use efficiency and reducing nutrient losses to the environment. Rajib Chakraborty, President, Soluble Fertilizer Industry Association (SFIA), says, 'The specialty fertilisers, particularly water-soluble fertilizers (WSFs), began to make inroads into the Indian market in the late 1990s. The real momentum in adoption and commercialisation of WSFs came in the early 2000s, when states like Maharashtra emerged as early adopters. And its adoption has increased by 20-30% over the years.' Specialty fertilisers include water-soluble fertilisers (WSFs), liquid fertilisers, micronutrient fertilisers, nano fertilisers, bio-stimulants, and organic formulations. While the big players in the country are focused on the production of major fertilisers like urea, DAP, MOP, and NPK, the specialty fertiliser segment is primarily led by MSMEs. While demand, especially for specialty fertilisers, is rapidly rising, the growth of India's domestic fertiliser production has been sluggish. Experts and industry stakeholders assert, among other things, that policies favouring imports have put local manufacturers at a disadvantage. 'No licenses are required for foreign suppliers,' as per the current regulations. 'An importer can simply submit a scanned letter to add the source, which allows them to sell across all operational states without facing the additional regulatory burdens of the Fertiliser Control Order (FCO),' says Rajib Chakraborty of SFIA; in contrast, an Indian manufacturer must navigate complex regulatory requirements, which include obtaining multiple licenses, maintaining offices, and setting up warehouses in each state where fertiliser is Rules, Small PlayersFor MSMEs, these are huge asks and not sustainable. Even though large manufacturers are subject to the same regulatory framework as smaller ones, their experience often differs due to scale advantages, according to Suhash Buddhe, Vice President, Vidarbha Industries Association. They can 'more easily navigate and comply with regulations due to their size and resources,' he says. MSMEs voice their grievances about the stringent FCO rules. They believe that their small size, which usually means selling goods worth around Rs 1 crore in a state, limits their operational flexibility. On the other hand, large companies with sales of Rs 100-200 crore can use warehouses to directly import and store consignments, thus bypassing certain regulatory hurdles that smaller units struggle with. Buddhe says, 'Many prefer imports over 'Made in India' products, not because of quality or price but due to complex regulatory hurdles and the inability of Indian SMEs to maintain licenses across multiple states. Even public sector undertakings (PSUs) are no exception.'ET Digital reviewed a PSU's tender for soluble fertilisers, which stipulated bidders (manufacturers/traders) to have an authorisation certificate for selling products in the applied state(s). The tender document specifies this condition. 'Similar cases have been observed in Government e-Marketplace (GeM) and direct tender invitations. Many PSUs are not floating the tenders through GeM, which promotes locally manufactured products. They are floating open tenders,' says Chakraborty. A senior official from the agriculture department states that the government is actively working to promote ease of doing business nationwide. Since fertiliser is a concurrent subject, many states have streamlined their systems, with ongoing efforts to further enhance the process, he notes. Meanwhile, Devesh Chaturvedi, Secretary, Agriculture & Farmers Welfare, says, 'There is always a scope for improvement.' Former Union Minister Suresh Prabhu acknowledges the difficulties faced by small fertiliser companies, especially in terms of compliance. 'Fertiliser companies face numerous issues, many of which are legitimate and require immediate attention,' says Prabhu. ET Digital attempted to contact officials in the concerned department through email and phone calls for this report; however, no response was received by the time the story was published. State officials overseeing fertiliser and agriculture departments declined to comment when contacted by phone. Some officials acknowledged the issue of over-regulation impacting SMEs but refused to provide further details. Although there has been no official response on this matter, experts and stakeholders point to structural issues in the regulatory framework. 'Regulatory framework is outdated' The FCO was enacted under the Essential Commodities Act, 1955, to regulate the quality of fertilisers and their distribution, particularly to facilitate the effective delivery of government subsidies and promote domestic production. Since then, the FCO, which is jointly administered by central and state authorities, has undergone several amendments. However, it has struggled to keep pace with the changing requirements of India's domestic agriculture, according to experts. They say the framework is outdated today, reflecting remnants of the 'Inspector Raj' and 'License Raj' Kedia, Banking Committee Chairman and former President of the Federation of Indian Micro and Small & Medium Enterprises (FISME), notes that fertilisers today are vastly different from those in 1985. 'The fertiliser list initially included basic nutrients like nitrogen, phosphorus, and potassium (NPK), primarily urea and DAP. Over time, it has expanded to include secondary nutrients like magnesium and calcium, along with micronutrients such as zinc and boron, making the regulatory framework more complex and wide-ranging,' he explains. With over 100 fertilisers currently listed under the FCO, along with countless mixtures of macro- and micro-nutrients, the current framework seems overly complex, says Kedia. 'Given the varying conditions across large states like Rajasthan or diverse regions like Andhra Pradesh, a label claim system could be more practical, he suggests. This, he argues, will empower industry while enabling 'consumers to make informed decisions based on specific nutrient requirements.' According to FCO rules, an SME involved in fertiliser needs to register separately in each state where it wants to operate. 'A few years ago, an initiative was launched to create a common portal for fertiliser manufacturers to register and operate nationwide. However, the effort reportedly didn't succeed, and the project ultimately fizzled out,' notes Kedia. Experts and stakeholders point out that the FCO bestows considerable authority upon individual inspectors, enabling them to suspend or shut down operations at their discretion. Experts point out that since fertiliser falls under the Essential Commodities Act, various departments may oversee it, depending on the state. 'In some cases, a single manufacturing unit may face oversight from as many as 32 inspectors, with the actual number on the ground often exceeding official records,' says Buddhe. From central government officials, such as the Deputy Director of Agriculture, Central Insecticide Inspector, Central Fertiliser Inspector, and Plant Protection Officer, to state government officials, such as the Chief Quality Control Officer, Chief Inspector (Seed), Deputy Director (Fertiliser), Technical Officer (Fertiliser), and Technical Officer (Insecticide), oversee the operations of fertiliser units. At the grassroots level, the Taluka Agriculture Officer adds yet another level of scrutiny. Additionally, flying squads from the Department of Agriculture conduct sudden inspections, he notes. 'This (several levels of inspection) fragments operations and increases compliance costs by 30-40% for MSMEs. Small manufacturers spend Rs 3-5 crore annually on compliance, equivalent to 20% of their R&D budgets, making innovation unsustainable,' adds Buddhe. A Punjab-based fertiliser SME's promoter admitted that his company incurred huge expenses to obtain licenses, maintain quality control systems, and meet the specific packaging and labelling requirements of FCO. 'We have experienced a significant surge in costs over the years, and increasing input costs have further exacerbated the situation,' he says. 'The plethora of complex and uncertain rules and regulations is creating a challenging environment for small fertiliser manufacturers in the country,' says another SME based out of Uttar Pradesh. Suresh Prabhu states that in 1999, during his tenure as the Minister for Fertilizers, a new policy was launched to address the industry's issues arising from excessive regulations, with the ultimate goal of phasing out the ministry itself. 'With the advancements in logistics and digital technologies enabling timely compliance, I believe it's time to revisit and update the fertiliser policy that was drafted in 1999. A new policy is overdue,' Prabhu says. However, regulation isn't the only challenge for fertiliser MSMEs in the country; they also deal with a skewed subsidy structure that favours larger companies, says Kedia. 'The current subsidy structure favours large manufacturers, giving them an uneven advantage. They receive subsidies on products with added micronutrients like zinc and boron. However, smaller players selling standalone micronutrient products don't get similar subsidies, putting them at a disadvantage.' After overcoming these initial hurdles, fertiliser MSMEs confront further challenges related to quality control for their smooth operations. Quality control The 2011 paper 'Fertilizer Quality Control in India: The need for a systemic change' by Sumita Kale and Laveesh Bhandari, published by FISME, stands out as one of the very few comprehensive studies on this topic. It highlights excessively strict tolerance limits and inadequate testing methods, especially for micronutrient fertilisers, as pressing concerns. The paper indicates that there are limited testing labs, which are poorly equipped and understaffed; additionally, it notes that sampling procedures are defective, all of which together undermine the accuracy and credibility of problems remain unresolved to this day, according to experts and stakeholders. The Central Fertiliser Quality Control & Training Institute (CFQCTI), Faridabad, has 'no information' on registered fertiliser dealers across the country, as per the RTI response received by ET Digital. Additionally, there was no definite number provided for fertiliser samples analysed and found non-standard in the last five years. Experts say that, despite increased capacity, testing labs are still unable to manage the minimum required samples, indicating a shortage of full-time inspectors. To maintain testing standards, the central government, however, established the National Accreditation Board for Testing and Calibration Laboratories (NABL), which accredits testing labs. Under the FCO, only 'approved' labs can conduct tests. Chakraborty highlights that most state laboratories fail to meet testing standards, with less than 5% being NABL-accredited. He recommends setting a strict deadline for NABL accreditation, requiring states to comply within a set timeframe, and not using non-NABL lab reports for criminal action against SMEs. 'We have increased the sanction of money to states for NABL accreditation of laboratories. We are actively addressing these issues,' says Agriculture Secretary Chaturvedi. Currently, there are 84 operational Fertilizer Quality Control Laboratories in India, including the four set up by the Central Government—the Central Fertilizer Quality Control & Training Institute, Faridabad, and its three associated regional laboratories. 'One nation, one license' To streamline operations of fertiliser units, Rahul Mirchandani, President of the Indian Micro-Fertilizer Manufacturers Association (IMMA), suggests a single licence for the entire country. 'With 'one nation, one license,' the FCO regulations should align with tax regulations, allowing businesses to bill and operate nationwide without state-specific constraints. This would eliminate the need for redundant licenses and reduce overhead costs,' says Aries Agro's, Chairman, believe key reforms are necessary to reduce import dependency, including limiting inspectors' powers and removing non-subsidised fertilisers from the Essential Commodities Act. They argue that stringent regulations, where minor lab errors can lead to jail time, create excessive fear among manufacturers and importers. Associations also demand a centralised portal for fertiliser. 'A centralised, pan-India licensing framework with a single-window digital compliance portal can reduce friction for manufacturers. Importers should also align with similar documentation and regulatory standards to ensure a level playing field. Additionally, creating a dedicated Department of Fertiliser and Agriculture Department liaison cell and encouraging PSUs to allocate a percentage of tender volumes to Indian small-scale manufacturers,' says Abhishek Wadekar, Founder & Chairman, Tradelink senior government official agreed that a central portal for fertiliser manufacturers to register and operate across the country would be beneficial. To promote local fertiliser production, stakeholders are calling for clearer clause definitions and less regulation. They suggest distinguishing between 'spurious' (intentional adulteration) and 'deficient' (unintentional nutrient deficiency). Currently, even a 0.1% deviation beyond tolerance limits can lead to spurious labelling and criminal prosecution. Standardising documentation across states is also a priority for them. Wadekar proposes addressing this gap through measures like harmonised compliance, centralised registration, and support mechanisms. Nishant Kanodia, Chairman, Matix Fertilisers and Chemicals, suggests adopting a risk-based, digital-first compliance model from other sectors could be beneficial since it would focus inspections on high-risk areas and simplify procedures for manufacturers with a good compliance track record.
Time of India
10-07-2025
- Science
- Time of India
LITU scholar Neha Thakare gets first prize in SOMS-2025
1 2 3 4 5 Nagpur: Neha Thakare a PhD scholar of chemical engineering department of Laxminarayan Innovation Technological University (LITU), won first prize at national-level competition held during SOMS-2025 in Gandhinagar, Gujarat. The July 3-5 event was jointly organised by Soluble Fertilizer Industry Association (SFIA) and the ICAR-National Research Centre for Grapes (ICAR-NRC Grapes), Pune. Neha worked under the guidance of Dr Bharat Bhanvase. She was the only scholar shortlisted from the Maharashtra and presented her innovative research on 'Advanced oxidation process for ammonia recovery from wastewater and reuse as a soluble fertilizer." Her work introduces a pioneering approach using hydrodynamic cavitation and advanced oxidation to convert wastewater pollutants into valuable agricultural inputs — an innovation praised for its environmental significance and industrial relevance. LITU vice-chancellor Dr Atul Vaidya congratulated Neha and Dr Bhanvase, stating, "The outstanding achievement is a proud moment for LITU. Neha's research not only reflects our academic excellence but also contributes meaningfully to the national dialogue on sustainable agriculture and wastewater valorisation."
India.com
26-06-2025
- Business
- India.com
China's sinister plan against India! After rare earth metal, stops supply of this critical material, set to affect agricultural sector due to...
PM Modi and Xi Jinping- File image New Delhi: In a major development, China has stopped the supply of certain specialty fertilizers to India. These fertilizers are used to boost the yield of fruits, vegetables, and other crops. According to the reports quoting the officials from several importing companies, China has suspended this supply for the past two months. It is important to note that China is a major global supplier of agricultural inputs. The issue is that it has stopped supplying these specialty fertilizers only to India, while continuing exports to other countries. To recall, China had earlier stopped the supply of rare earth magnets to India. India imports nearly 80 percent of its specialty fertilizers from China. Rajib Chakraborty, President of the Soluble Fertilizer Industry Association (SFIA), said, 'China has been disrupting the supply of specialty fertilizers to India for the past four to five years. But this time, it has completely stopped it.' Before fertilizers are dispatched from Chinese factories, they must be inspected by the Chinese government. Experts say that China is deliberately not inspecting fertilizers bound for India. It is using various indirect methods to halt exports without officially imposing a ban. What does China want? Not only fertilizers, China is also restricting the export of certain specific raw materials. Many believe that these steps are taken in response to tariffs and other restrictions. The Indian government has made it mandatory for investments coming from China to receive government approval. This is directly impacting China. There have been clashes at the border, and China has supported Pakistan. These are also among the reasons why China has taken such steps. These are options available for India: India does not yet have the technology to manufacture specialty fertilizers. Until now, the demand for these fertilizers was low, so setting up manufacturing plants in India wasn't profitable for companies. However, Chakravarty said that specialty fertilizers are now beginning to replace primary fertilizers, leading to increased consumption. He also mentioned that several companies are now showing interest in setting up manufacturing units. Meanwhile, India can also explore other options for importing these fertilizers. A senior official from a multinational fertilizer company said that fertilizers can also be sourced from other countries such as Jordan and those in Europe. However, the challenge lies in ensuring that these chemicals reach India on time. Urea, diammonium phosphate (DAP), and muriate of potash are considered general-purpose fertilizers and are used for a variety of crops. In contrast, specialty fertilizers are designed for specific needs.
Time of India
26-06-2025
- Business
- Time of India
China plays hardball! After choking rare earth magnets supply, China blocks important agriculture-related shipments to India; continues exports to others
Chinese officials are avoiding inspection of India-bound consignments. (AI image) China has stopped exports of specialty fertilisers to India over the past two months, whilst continuing to supply other countries, according to senior executives at major importing firms. For India, these fertilisers are crucial for enhancing yields of fruits, vegetables and other profitable crops. The Chinese authorities require inspection of factory shipments. Sources familiar with the situation told ET that Chinese officials are avoiding inspection of India-bound consignments, effectively blocking exports through procedural means rather than an explicit prohibition. The technological capability to manufacture speciality fertilisers is currently absent in India, as historically low volumes have made local manufacturing facilities financially unfeasible. This development occurs amid growing diplomatic strains between the nations over the last five years, marked by border conflicts and China's alignment with Pakistan. China blocks fertilizer shipments to India Approximately 80% of India's requirements for these chemical inputs come from Chinese sources. "China has been restricting suppliers of specialty fertilisers to India for the last four to five years. However, this time it is a complete halt," Rajib Chakraborty, president, Soluble Fertilizer Industry Association (SFIA) was quoted as saying. China has implemented restrictions on exporting crucial materials like rare earth magnets, seemingly in response to imposed tariffs and other limitations. For countries sharing a border with India, government authorisation is required for investments, a measure specifically targeting its northern neighbour. China Blocks Speciality Fertilizers Exports To India Industry data suggests that India's typical imports of specialty fertilisers amount to 150,000-160,000 tonnes during the June-December period. Non-subsidised soil nutrients, known as specialty fertilisers, include various categories including water-soluble fertilisers (WSFs), liquid fertilisers for foliar and fertigation, controlled release fertilisers (CRFs), slow-release fertilisers (SRFs), micronutrient fertilisers, fortified fertilisers, customised fertilisers, nano fertilisers, bio-stimulants, organic and other value-added and innovative fertilisers. Speciality fertilisers provide enhanced crop production, maintain soil quality and ensure efficient nutrient utilisation, whilst reducing negative effects on the environment when compared with conventional fertilisers. Also Read | Reducing acute dependence, countering China's near monopoly: India readies Rs 5,000 crore scheme for rare earth minerals According to the Fertilizer Association of India, the Indian micronutrient fertiliser market is projected to surpass $1 billion by 2029, growing at a CAGR of 9.2%. The FAI also forecasts that Indian biostimulants will reach $734 million by 2029, with a CAGR of 15.6%, whilst the organic fertiliser sector is expected to expand to $1.13 billion by 2032, showing a CAGR of 7%. Leading fertiliser organisations including Deepak Fertilizers, Paradeep Fertilizers and Nagarjuna Fertilizer Company are active participants in this market segment. "Specialty fertilisers are now replacing primary fertilisers, thereby increasing their consumption volume," Chakraborty said, adding that a large number of companies are now interested in setting up manufacturing units. Also Read | India bleeds Pakistan dry: Water at 'dead' levels in Pakistan's dams; bigger Indus river plans in the works - top points to know India has the option to look at additional sources for importing these agricultural inputs. "While alternative destinations such as Jordan and Europe can be explored, the challenge is to land these chemicals in time," said a senior official of a multinational fertiliser company. Whilst standard fertilisers like urea, diammonium phosphate (DAP) and muriate of potash (MOP) serve general agricultural needs, speciality fertilisers provide precise nutrient delivery systems tailored to particular requirements. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
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Business Standard
26-06-2025
- Business
- Business Standard
After magnets, China halts speciality fertiliser shipments to India
China has suspended the export of speciality fertilisers to India over the past two months, The Economic Times reported today, citing senior executives from major importing firms. These fertilisers, crucial for enhancing yields of high-value crops such as fruits and vegetables, continue to be shipped to other countries. Inspections withheld despite no official ban Shipments bound for India are being withheld through procedural delays. Chinese authorities have reportedly ceased inspections of consignments meant for Indian buyers, effectively stalling exports without announcing an official ban, The Economic Times reported, citing sources. Normally, India imports between 150,000 and 160,000 tonnes of speciality fertilisers during the June–December period. India relies on China for approximately 80 per cent of its speciality fertiliser requirements. Rajib Chakraborty, President of the Soluble Fertilizer Industry Association (SFIA), stated that China had been restricting suppliers of speciality fertilisers to India for the past four to five years, but this time, the restrictions amounted to a complete halt. China expands trade restrictions beyond fertilisers China's recent actions are not confined to fertilisers. Since April, it has also restricted exports of rare earth materials, impacting global supply chains for critical industries such as automotive and electronics. Manufacturers in the United States, Europe, and India are now experiencing shortages of essential components like industrial magnets. Domestic growth stifled by regulation despite rising demand India's micronutrient fertiliser market is projected to exceed $1 billion by 2029, growing at a compound annual growth rate (CAGR) of 9.2 per cent, according to the Fertiliser Association of India (FAI). Despite this growing demand, domestic manufacturers face major hurdles under the Fertiliser Control Order (FCO). Industry groups blame policy for import dependence Industry groups argue that existing policies favour Chinese imports and hinder Indian manufacturers. The Chamber for Agri Input Protection (CAIP), based in Ahmedabad, added that no other sector, including pharmaceuticals, is subject to such stringent oversight. Startups and local firms are required to obtain multiple licences and maintain offices and warehouses in each state where products are sold. In contrast, foreign suppliers enjoy comparatively light regulatory obligations, needing only to meet basic import norms to distribute nationwide, industry bodies said. Government data show that India imported 7 million tonnes of urea in 2023–24, worth $2.6 billion. Of this, 1.86 million tonnes—valued at $730 million—originated from China. Additionally, India imported 10.65 million tonnes of phosphate and potash (P&K) fertilisers, with 2.2 million tonnes supplied by China.
