The government has decided to keep aside $2 billion to set up two urea plants abroad that will eventually produce enough fertilizer to meet 10% of the country’s demand, Mint had reported yesterday.
This is a good idea. A lot of the natural gas consumed in India is used to make urea. But there are fears of a looming shortage of natural gas. Besides getting the private sector into gas exploration, the government has also been busy trying to sign long-term deals with several West Asian and Central Asian countries to buy gas. This gas will then have to be brought into the country through undersea pipelines.
The problem is that the pipelines will either be undersea or have to go through countries that are politically unstable—like Pakistan and Afghanistan. It is a far better idea to buy the raw material (gas) as well as manufacture the final product (urea) in another country. Shipping urea is less prone to risk than piping gas across unstable borders.