NEW DELHI: India has built substantial fertilizer production capacity, especially in urea, but remains heavily dependent on imports. The vulnerability has come into sharper focus amid the West Asia war, which threatens key supply routes.
NEW DELHI: India has built substantial fertilizer production capacity, especially in urea, but remains heavily dependent on imports. The vulnerability has come into sharper focus amid the West Asia war, which threatens key supply routes.
The reason is structural: domestic output is constrained by limited availability of critical raw materials such as natural gas, phosphate rock and potash, even as demand continues to rise. Mint explains.
The reason is structural: domestic output is constrained by limited availability of critical raw materials such as natural gas, phosphate rock and potash, even as demand continues to rise. Mint explains.
Why is India still dependent on fertilizer imports?
India is the world’s second-largest fertilizer consumer, but domestic supply hasn’t kept pace.
The country imports about 60% of its diammonium phosphate (DAP) requirement and roughly 15% of its urea and nitrogen, phosphorus and potassium (NPK)-based fertilizer demand, along with intermediates such as rock phosphate, phosphoric acid and potash.
Even urea relies on natural gas as feedstock, much of which is imported. This leaves domestic production exposed to global energy markets.
“Domestic availability is limited for raw materials and intermediaries such as liquefied natural gas (LNG), phosphate rock and ammonia,” said Anand Kulkarni, director at Crisil Ratings.
Analysts say this dependence is unlikely to ease without a shift in technology. Alternatives such as coal-to-urea and green ammonia are emerging, but remain nascent.
“Until recently, Make in India has remained largely aspirational in the fertilizer sector, which continues to depend heavily on imported raw materials and foreign technologies rather than building indigenous capabilities,” said Rajib Chakraborty, national president, Soluble Fertilizer Industry Association.
“Structural reforms are needed to empower Indian manufacturers, especially MSMEs, to move beyond conventional technologies and invest in R&D for superior, home-grown agricultural inputs,” he said.
What has policy done—and why hasn’t it solved the problem?
Successive policies have boosted domestic output, but not eliminated import dependence.
The New Investment Policy (NIP) 2012 incentivised new urea plants, while the New Urea Policy (NUP) 2015 aimed to maximize indigenous production. These measures helped raise urea output to 30.6 million tonnes in 2024-25 from 22.5 million tonnes in 2014-15.
The government also introduced the Nutrient-Based Subsidy (NBS) scheme in 2010 for phosphatic and potassic fertilizers, allowing companies to import freely under the Open General Licence regime. Long-term import tie-ups, including with Saudi Arabia for DAP, were meant to ensure supply security.
Even so, the system remains import-reliant, particularly for raw materials, and fiscally expensive.
Fertilizer subsidies act as a buffer for farmers but weigh on public finances. The subsidy bill is projected at ₹1.71 trillion for FY27, down slightly from ₹1.86 trillion in FY26, but still elevated.
How is the war in West Asia affecting supplies?
The conflict has exposed the risks of geographic concentration in India’s import basket.
West Asia accounts for nearly half of India’s DAP imports and about two-thirds of urea imports. In FY25, countries such as Saudi Arabia, United Arab Emirates (UAE), Qatar and Oman were key suppliers, with Oman, Saudi Arabia, UAE and Bahrain together accounting for about 70% of India’s urea imports.
A prolonged disruption, especially around the Strait of Hormuz, could tighten global supply and push up subsidy costs.
For now, the impact is limited. India has built sufficient buffers ahead of the upcoming kharif planting season. But policymakers are moving to diversify sourcing, increasing purchases from Indonesia, Belarus, Morocco, Jordan, Russia and China.
Are stocks adequate for the kharif season?
Yes, for now.
As of 10 March, total fertilizer stocks stood at 18.01 million tonnes, up 36.6% from a year earlier, supported by advance stocking and lower off-season demand.
Urea stocks were at 6.15 million tonnes, DAP at 2.5 million tonnes, and NPK fertilizers at 5.6 million tonnes. The buffer is seen as adequate to meet early kharif demand for crops such as paddy, maize and pulses.
India consumed an estimated 18.5 million tonnes of urea, 5.7 million tonnes of DAP and 7.6 million tonnes of NPK fertilizers in the 2025 kharif season (June–October).
How strong is domestic production capacity?
India has a large production base, but it is uneven across nutrients.
Urea dominates domestic output and accounts for about 55% of total consumption, with import dependence at roughly 15%. NPK fertilizers make up about 20% of consumption, with similar import reliance.
DAP is the outlier. It accounts for around 16% of consumption but has an import dependency of nearly 60%, reflecting the lack of domestic phosphate resources.
What is the way ahead?
Closing the gap will require both capacity expansion and technological change.
Past policies such as NIP 2012 added about 7.6 million tonnes of capacity across six plants, helping contain imports. The next phase hinges on alternative production pathways and regulatory reform.
“Policy support on adoption of green ammonia will reduce import dependency on ammonia and help stabilise profits for complex fertilizer manufacturers, which may, in turn, attract more investments,” said Crisil Ratings' Kulkarni.
Chakraborty of the Soluble Fertilizer Industry Association said the focus should shift to building domestic technological capabilities. He also called for modernizing the Fertilizer (Control) Order to allow greater flexibility in introducing new formulations and production methods, steps that could spur domestic R&D and widen the range of nutrient solutions available to farmers.