India fertilizer import

India fertilizer import

Subject: Geography

Section: Economic Geography

Context: Shortage of fertilizers

Concept:

India is the 3rd largest producer of fertilizer after China & the US.

India is the 2nd largest consumer of fertilizer after china.

India also ranks 2nd in the production of nitrogenous fertilizers and 3rd in phosphatic fertilizers. Potash requirement is met through imports since we have limited reserves of potash.

Although India progressed a lot with respect to the production and consumption of fertilizers, it still lags behind several countries in consumption per hectare.

Pakistan, China, and Bangladesh have more consumption per hectare of fertilizer than India.

The self sufficiency in urea production achieved by 2000 was lost due to unfriendly policies which discouraged further investments in the sector for two decades and also due to the privatisation move and closure of a number of plants on account of low energy efficiency which paved the way for large-scale imports.

India depends heavily on imports for meeting its fertilizer raw materials (natural gas, sulphur and rock phosphate), intermediates (ammonia and sulphuric and phosphoric acids), and finished products (diammonium phosphate, potash and complex fertilizers) requirements.

• India, the world’s largest urea importer, Urea imports amount to 8-9 million tonnes per annum mostly from China, Oman, Ukraine, and Egypt.
• On an average, five million tonnes of phosphatic fertilizers are imported to India mostly from China, Morocco, Saudi Arabia, Russia and Jordan
• Potash supplies (around four million tonnes a year) are fully imported from Canada, Russia, Belarus Jordan, Lithuania, Israel, and Germany
• major suppliers of DAP to India-Saudi Arabia, Morocco and China.

Currently, the fertilizer production of the country is 42-45 million tonnes, and imports are at around 18 million tonnes. India’s fertilizer consumption in FY20 was about 61 million tonnes — of which 55% was urea. Since non-urea (MoP, DAP, complex) varieties cost higher, many farmers prefer to use more urea than actually needed.

The government has taken a number of measures to reduce urea consumption. It introduced neem-coated urea to reduce illegal diversion of urea for non-agricultural uses. It also stepped up the promotion of organic and zero-budget farming.

Subsidy

• Subsidy on Urea: The Centre pays subsidy on urea to fertilizer manufacturers on the basis of cost of production at each plant and the units are required to sell the fertilizer at the government-set Maximum Retail Price (MRP).
• Subsidy on Non-Urea Fertilizers: The MRPs of non-urea fertilizers 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”. Examples of non-urea fertilizers: Di-Ammonium Phosphate (DAP), Muriate of Potash (MOP).

Russia produces 50 million tonnes of fertilizers annually accounting for 13 per cent of the world’s total output. Russia is the second largest producer of ammonia, urea, potash and the fifth-largest producer of complex phosphates. It is also the largest exporter of urea, NPKs, ammonia, UAN and ammonium nitrate, and the third-largest potash exporter.