India's fertilizer sector faces challenges like import reliance, geopolitical conflicts, and environmental issues. The government has implemented initiatives like NBS, urea plant revival, and PM-PRANAM Scheme, but limited R&D investment hinders innovation. Reforms should focus on eco-friendly fertilizers, organic and bio-fertilizers, integrated nutrient management strategies, domestic production capacities, and R&D.
Copyright infringement not intended
Picture Courtesy: bizzbuzz
India experienced a strong southwest monsoon; 6.1% above the historical average, favorable weather led to farmers planting more kharif crops, demand increased for fertilizers, resulting shortage.
Fertilizers are concentrated nutrient sources, both mineral and organic, that replenish the soil with primary macronutrients—Nitrogen (N), Phosphorus (P), and Potassium (K).
Fertilizer Sector in India
India is the second-largest user and third-largest producer of fertilizers globally. India meets around 87% of its urea consumption domestically and produces 90% of NPK Fertilizers within the country.
Regulation: Department of Fertilizers (DoF) ensures timely and adequate fertilizer availability across the country.
Challenges In Fertilizer Sector
India depends on imports, particularly for 100% of potash and 60% of DAP, exposing to price volatility and supply chain shocks. Recent fertilizer supply challenges are linked to supply squeeze by China.
Geopolitical conflicts, like the Ukraine-Russia and Gaza wars, disrupt global fertilizer and raw material markets, increasing import costs and pressuring the government's subsidy budget.
Government's fertilizer subsidy budget for 2025-26 is projected at around Rs 1.67-1.7 lakh crore, limiting developmental spending.
Excessive use of chemical fertilizers contributes to environmental issues. Current NPK ratio of 7.7:3.1:1 deviates from the recommended 4:2:1, impacting soil health and reducing agricultural productivity.
Fertilizer runoff contaminates groundwater with nitrates. 2024 Annual Groundwater Quality Report found over 20% of samples from 440 districts contaminated with nitrates.
Price gap between subsidized and industrial urea, leading to the illegal diversion of subsidized fertilizers for non-agricultural uses.
India lacks sufficient domestic reserves of key raw materials like rock phosphate and natural gas, crucial for fertilizer production, limiting self-sufficiency.
Many farmers lack sufficient knowledge of balanced fertilizer application and sustainable practices. Adoption rates for alternatives like bio-fertilizers and nano-fertilizers remain low due to limited awareness, distribution, and training.
Climate change introduces unpredictability in crop production, complicating fertilizer demand and impacting market stability.
Industry requires more innovation in fertilizer formulations to meet evolving agricultural needs. While government initiatives promote improvements, limited investment in R&D hinders the development of new and improved solutions.
Nutrient Based Subsidy (NBS) for phosphatic and potassic (P&K) fertilizers, it provides a fixed subsidy based on nutrient content, with rates decided annually or bi-annually. For the 2025 Kharif season, ₹37,216.15 crore was allocated.
Government revived five closed urea plants, which are operational or nearing completion by 2025, aiming for self-sufficiency in urea production by the end of 2025.
Government mandated 100% neem coating on all subsidized agricultural-grade urea. This slows nitrogen release, improves nutrient efficiency, reduces nitrogen loss, decreases diversion, and improves soil health.
PM-PRANAM Scheme provides financial incentives for states to reduce chemical fertilizer use by linking grants to subsidy savings, promoting sustainable agriculture.
Soil Health Cards provide farmers with a detailed "report card" on their soil's nutrient status and customized recommendations for fertilizer use and soil amendments.
Pradhan Mantri Kisan Samridhi Kendras (PMKSKs) sell 'Bharat' brand fertilizers, offer soil testing, farm equipment rentals, and advisory services.
Under Fertilizer Diplomacy, India secured a five-year agreement with Saudi Arabia's Maaden in July 2025 for 3.1 million metric tonnes of DAP annually.
Schemes like Paramparagat Krishi Vikas Yojana (PKVY), National Project on Organic Farming (NPOF), Mission Organic Value Chain Development for North-Eastern Region (MOVCDNER), and Bhartiya Prakritik Krishi Padhati (BPKP) encourage organic and bio-fertilizer use.
Encourage the adoption of eco-friendly and slow-release fertilizers, organic and bio-fertilizers, and integrated nutrient management strategies, to reduces environmental footprint of conventional farming.
Scale up initiatives like Paramparagat Krishi Vikas Yojana (PKVY), create a robust market for bio-fertilizers, organic manure, and soil health amendments.
Promote adoption of precision agriculture tools like drone-based spraying for nutrient application, offering faster application and reduced input costs.
Establish Centre of Excellence on Fertilizers (CoEF) in a public-private-producer partnership model (4P) to encourage innovation and skill development.
Utilize digital platforms/apps to spread information and advisories in local languages about balanced fertilizer use, sustainable practices, soil health management, and the benefits of organic and bio-fertilizers.
Investment to increase domestic production capacities for essential fertilizers like urea to reduce import dependency and stabilize supply.
Government policies and subsidies should be designed to promote balanced fertilizer use and incentivize the adoption of sustainable and eco-friendly options.
Improve the distribution network and logistics infrastructure to ensure timely and affordable access to fertilizers.
Promote Research and Development (R&D) for innovative fertilizer formulations, advanced application technologies like AI, and IoT-based systems.
Encourage international collaborations to secure long-term raw material supplies and diversify sourcing, mitigating risks from global supply chain disruptions.
Indian companies should be encouraged to invest in setting up fertilizer manufacturing facilities in other countries, leveraging raw material access, labor, and strategic trade locations to support domestic demand and export-linked trade.
By implementing these recommendations, the fertilizer industry can contribute to food security, agricultural productivity, and environmental sustainability, both in India and globally.
Source: INDIAN EXPRESS
|
PRACTICE QUESTION Q. Critically analyze how the PM-PRANAM scheme addresses the twin challenges of fertilizer subsidy and environmental degradation? 150 words |
The PM Programme for Restoration, Awareness Generation, Nourishment, and Amelioration of Mother-Earth (PM-PRANAM) provides financial incentives for states to reduce chemical fertilizer use by linking grants to subsidy savings.
They are fertiliser retail shops converted into one-stop centres for farmers, offering 'Bharat' brand fertilisers, soil testing, farm equipment rentals, and advisory services.
Soil Health Cards, launched in 2015, provide farmers with a detailed "report card" on their soil's nutrient status and customized recommendations for fertilizer use, promoting science-based farming.
© 2025 iasgyan. All right reserved
