What India is now doing to avoid a fertilizer shock

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.