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Business News/ News / India to sign long-term deal for buying key fertilizer input from Mauritania
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India to sign long-term deal for buying key fertilizer input from Mauritania

Centre is willing to spend as much on fertilizer subsidy as required to protect farmers’ interests, says union chemicals and fertilizer minister Mansukh Mandaviya

Union chemicals and fertilizers minister Mansukh Mandaviya. (ANI)Premium
Union chemicals and fertilizers minister Mansukh Mandaviya. (ANI)

New Delhi: India is planning to ink a long-term contract with Mauritania for importing rock phosphate, a key fertilizer ingredient, after the Ukraine war and Red Sea crisis hit supplies and pushed up global prices, union chemicals and fertilizers minister Mansukh Mandaviya said in an interview.

India is scouring for steady suppliers of fertilizer with an eye on the union budget presented earlier this month, which allocated a massive 1.64 trillion for fertilizer subsidy. India already has entered into long-term agreements with Morocco, Senegal, Israel, Oman, Canada, Saudi Arabia and Jordan in the past two years as part of this playbook.

Though India is moving toward gaining self-sufficiency in urea, it still depends on imports to meet its rock phosphate demand. 

“To meet our rock phosphate demand, in the past two years, we have entered long-term contracts with several countries, including Morocco, Jordan, Oman, Russia and Saudi Arabia. We keep exploring new countries so that there is no dependency on one or certain countries. Now we are looking at Egypt and Mauritania to sign a long-term agreement for three years to improve the availability of phosphatic fertilizers like DAP (Di-ammonium phosphate) and NPK (nitrogen, phosphorus and potassium) as these countries have rock phosphate and phosphoric acid," Mandaviya said

“Under the joint venture, both private and public players will do the mining, produce and bring the fertilizers to India. Fertilizer security in today’s time is one of the biggest issues.

With long-term agreements, supply is assured. It not only brings self-sufficiency to a country but also helps the country to ensure that there is no supply crunch during crises (of the kind) that we have witnessed during covid-19, Russia-Ukraine war and now the Red Sea crisis," Madaviya added.

Rock phosphate is the key raw material for DAP and NPK fertilizers. Volatility in international prices affects domestic prices of fertilizers and hinders the progress and development of agriculture in a country which is 90% dependent on fertilizer imports.

Data from the department of chemicals and fertilizers showed that India’s fertilizer requirement is around 43.5 million tonnes per year.

India is dependent on imports for muriate of potash and imports nearly 5 million tonnes of phosphate rock, 2.5 million tonnes of phosphoric acid and 3 million tonnes of DAP annually. In the case of diammonium phosphate, around 60% of the supply is imported. In addition, 25% of urea and 15% of NPK fertilizer requirements are met through imports.

The country accounts for around 18% of the world's DAP production, imports about 23.6% of DAP traded globally, and consumes around 30% of DAP worldwide.

“During covid-19, all ports and fertilizer plants were closed, creating supply tightness. We somehow managed to get fertilizers from the global market. After the Russia-Ukraine crisis, payment became an issue, as there were sanctions on Russia. We sailed through it by following different routes and relying on other countries. Prices moved up and the Indian government bore it," Mandaviya added. 

“In the latest Red Sea crisis, we are facing problems getting fertilizers from   countries such as Russia, Canada and Jordan that we have a long-term contract with. We are re-routing the shipments with the help of the Navy which are arriving with a delay of 20-30 days against the usual 10-12 days. Freight costs have shot up, which may increase the landing price.

"The situation hasn’t improved yet but there has been no disruption so far as the Indian Navy is escorting the consignments. There will be no supply disruption in the country. If prices go up, the government will bear it."

Mandaviya added that the Centre is willing to spend as much on fertilizer subsidy as required to protect farmers’ interests.

“Urea is a major component of the government’s subsidy basket, and we spend a huge chunk on urea subsidy. If the gas price goes up, the production cost is bound to shoot up. Last year, gas prices went up significantly, putting upward pressure on production costs, and the government bore it. Similarly, in the case of DAP, if the international price of rock phosphate increases, the price will automatically flare up, and vice versa.

There will never be a lack of fertilizers and these will always be available to farmers at a reasonable rate. Irrespective of any situation, the government will bear the burden," Mandaviya said.

Mandaviya said the government’s efforts are to bring self-sufficiency in urea by 2025 by increasing production to 31-31.5 million tonnes from the current 30 million tonnes and replacing demand for 2.5 million tonnes with alternatives like nano urea and urea gold. The target can be achieved by setting up new plants with attractive incentives to manufacturers, he said.

At present, four fertilizer plants in India are operational. The government is trying to make a fifth—coal gasification-based Talcher Fertilisers Ltd – functional this year.

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ABOUT THE AUTHOR
Puja Das
Puja Das is a New Delhi based reporter, covering food, farm, fertiliser, water, and climate change policies for Mint. Puja reports on food security, farmers' distress and how the agriculture sector is impacting India's rural economy along with policy initiatives to help meet the pledges made at COP21 in Paris. Puja holds a post-graduation degree in Broadcast Journalism from the Indian Institute of Journalism & New Media, Bangalore.
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Published: 21 Feb 2024, 04:22 PM IST
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