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Picture Courtesy:  Indian Express

Context:

China's decision to cut and eventually halt exports of Di-Ammonium Phosphate (DAP) has created a supply squeeze in the global market, directly impacting India.

What is DAP and Why is it Important?

Di-Ammonium Phosphate (DAP) is the second most consumed fertilizer in India, after urea.

It is a primary source of Phosphorus (46%) and also contains Nitrogen (18%).

Phosphorus is a crucial nutrient for plants during their early growth stages, essential for strong root and shoot development. Farmers apply DAP at the time of sowing.

China's Role in the Supply Squeeze

Dominant Supplier => Until 2023-24, China was a major, the top, supplier of DAP to India. Imports from China were 22.9 lakh tonnes (lt) in 2023-24.

Export Restrictions => Since the beginning of 2025, China has completely stopped DAP exports. Imports in 2024-25 plummeted to just 8.4 lt before stopping entirely. Reasons for the Ban:

• Domestic Priority: China is prioritizing its own farmers to ensure food security.
• Industrial Demand: Phosphorus is a key component in the production of batteries for Electric Vehicles (EVs), and China is diverting supplies to meet the growing demand from this sector.

Impact on India

Depleted Stocks => Opening stocks of DAP for the Kharif season on June 1, 2025, were critically low at 12.4 lt, compared to 21.6 lt in 2024 and 33.2 lt in 2023.

Soaring Prices => The global shortage has pushed up prices significantly. The landed price of imported DAP has increased from $515−525 per tonne in mid−2024 to over $780 per tonne by mid-2025.

• The price of phosphoric acid, a key intermediate for domestic DAP production, has also risen from 950 per tonne in late 2024 to 1,258 per tonne for the July-September 2025 quarter.

Reduced Sales => The supply crunch and high prices have led to a drop in DAP sales, which fell from 108.1 lt in 2023-24 to 92.8 lt in 2024-25.

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Shift Towards Alternatives

The DAP shortage has encouraged a shift towards more balanced fertilization, a practice long advocated by agronomists.

Problem with Overusing High-Analysis Fertilizers => Fertilizers like DAP (46% P) and Urea (46% N) have a very high concentration of a single nutrient. Over-application can lead to nutrient imbalances in the soil, harming long-term soil health and crop productivity. Most crops require a balanced mix of multiple nutrients.

Rise of Alternative Complex Fertilizers => With DAP becoming scarce and expensive, farmers and the industry have adapted by turning to NPKS (Nitrogen, Phosphorus, Potassium, Sulphur) complexes.

Ammonium Phosphate Sulphate (APS - 20:20:0:13) => This has emerged as India's third most consumed fertilizer. Its sales have skyrocketed, reaching a record 69.7 lt in 2024-25.

• While it has lower Phosphorus (20%) than DAP, it provides Sulphur (13%), which DAP lacks, and a balanced 1:1 ratio of Nitrogen and Phosphorus.
• It is particularly effective for sulphur-loving crops like oilseeds, pulses, cotton, and onions.

Single Super Phosphate (SSP) => Sales of SSP, which contains 16% Phosphorus and 11% Sulphur, have also seen a significant increase.

• While DAP sales have declined, the consumption of NPKS complexes has surged by over 28% in 2024-25.

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Strategic Implications for India

New Market Dynamics

The DAP shortage of around 20 lt, caused by China's exit, is being filled by the alternative fertilizers.

Farmers are adapting to the new reality by applying less DAP and more NPKS complexes.

While the government has informally capped DAP's retail price at Rs 1,350 per bag, it often sells for higher. Alternatives like APS are available at a similar or slightly higher price, making them a viable option.

Long-Term Benefits

Reduced Import Dependency => India has limited domestic rock phosphate reserves, the raw material for DAP. The country is heavily reliant on imports of either finished DAP or its inputs (phosphoric acid, rock phosphate).

Efficient Use of Forex => Capping or reducing DAP consumption promotes a more efficient use of scarce foreign exchange reserves.

Promoting Balanced Fertilization => The crisis is naturally pushing the agricultural sector towards more sustainable and balanced fertilization practices, which is beneficial for long-term soil health and productivity.

Conclusion

China's export ban has created a short-term crisis, it has also provided an opportunity for India to rationalize its fertilizer use, reduce its dependency on a single product, and move towards a more sustainable agricultural model.

Must Read Articles: 

Challenges in India's Fertiliser Imports 

Reforming India's Food and Fertiliser Subsidies

Source: 

Indian Express