India has the largest area under cultivation in the world. Its farming land constituted 169.3 million hectares (mh) in 2019. India uses more land for crop cultivation than the US (160.4 mh), China 135.7 mh), Russia (123.4 mh) or Brazil (63.5 mh). It has the highest rainfall in the world, nearly 1,200 mm a year. This has been 475 mm for Russia, 650 mm for China and 755 mm in the US. So, India has no inadequacy of land, water, and sunshine to maintain a developed agricultural sector. But these are not all. The country is plagued by a weak fertilizers policy and other institutional factors including improper political will to have a people oriented vibrant agricultural sector. India has been an agricultural country. About 60% of the population depend directly on agriculture. It has achieved self-sufficiency in food production and many other agricultural products. Per-capita food availability has increased in the past decades as agriculture grew more than the growth rate of population. It also exports a lot of agricultural products. So, the importance of fertilizers and pesticides is very high in a country like India. This is why the fertilizer industry has been considered as a core sector in India’s industrial base. Due to several historical, physical, and institutional factors a new agricultural policy known as the Green Revolution was initiated. It was initiated in Punjab, Haryana, and western Uttar Pradesh. Later it was implemented more broadly. This policy was heavily dependent on the use of fertilizers and that trend has continued in the Indian agricultural sector.
The fertilizer market in India is sized at around ` 898.5 billion in 2022 according to a report by the IMARC Group. It is estimated that the market size will rise to `1,188.3 billion in 2028. It means that the expected growth rate of fertilizer consumption in India, on a CAGR basis, will be 4.85% between 2023 and 2028.Despite high growth of fertilizer consumption, the average use of fertilizers is much lower compared to most of the developed countries as well as many developing countries of the world. The use of fertilizers is not only low but also highly skewed. There are quite a number of states in the country where the penetration of fertiliser use is quite low. Why does India need to be self-sufficient in fertiliser production? It has been mentioned earlier that India cultivates the highest area of land globally. So, demand for fertilisers should be very high. But India produces much less fertilizers domestically. Almost one third of its requirement is met by imports. India imports most of its fertilizers from China, the United Arab Emirates and the US. India is one of the top three importing countries of the world. The US is the biggest importer with 47,500 shipments (containers delivered), followed by Vietnam with 44,500 shipments and India stands third with 32,848 shipments. India imports four types of fertilizers -namely urea, di-ammonium phosphate (DAP), murate of potash (MOP), nitrogen-potassium-phosphorus (NPK).
India is fully dependent on DAP as potassium is not produced sufficiently in India. During the Russia-Ukraine war, the prices of fertilizers increased by more than 100%. The import of fertilisers also increased before the geo-political crisis, that is, in the Covid 19 pandemic period. Between 2018-19 and 2020-21 India’s fertilizers imports increased by almost 8% to reach 20.33 MT from 18.84 MT.The Indian government is aiming for self-sufficiency in the fertiliser segment. However, there are different types of problems. One, rock phosphate is the key material for DAP and NPK fertilizers. But in this regard, India is highly dependent on other countries. Secondly, price volatility of fertilisers in the international market also affects India’s agriculture to a large extent. The Indian government has been trying to be self-reliant in rock phosphate production for which the Department of Fertilizer has been planning to exploit and produce it from Rajasthan mines.In the Budget 2023, the finance minister announced alternatives to chemical fertilizers and tried to boost natural and organic farming. But the use of these items is still very low. Additionally, how far these alternatives would be real substitutes for chemical fertilizers remains a question. In the Budget 2023, the fertiliser subsidy has been drastically reduced to Rs.1.75 lakh crore for 2024 from Rs. 2.25 lakh crore in FY 2023 (revised estimate) which may create further problems for India’s agricultural class.
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