India’s Fertilizer Dependency: The Road Towards Improving the Indian Strategy

The Green Revolution in India, which was pioneered by Agricultural Scientist Dr MS Swaminathan and introduced during the second of the five-year plans, was a turning point in the nation’s agricultural production capacity. The country, which had earlier struggled to produce enough food for its own citizens and had to deal with frequent famines and shortages, was now self-sufficient, in a dramatic turn in fortunes.

Illustration by The Geostrata

A significant contributor to the success of this revolution was the introduction of chemical fertilisers on a large scale, which caused a multifold increase in crop yield by improving the NPK (Nitrogen, Phosphorus, Potassium) content of the soil. These fertilizers were also made very accessible and affordable by substantial subsidisation, significantly reducing cultivation costs and directly benefitting small and medium farmers.

Large production also translates into stabilised prices for staple goods distributed through Public Distribution Systems (PDS), which contributes towards a macro-level food security India has been able to build up.

Despite a surge in organic fertilizers over recent years, it is worth noting that India still majorly depends on chemical-based fertilizers that have an adverse effect on the soil balance (i.e., the balance of NPK in the soil).

This has seriously affected the long-term fertility of the soil, which has resulted in farmers applying higher levels of fertilizers just to keep up with historical yields.

IMPORTANCE OF FERTILIZERS IN ENSURING FOOD SECURITY:

The introduction of fertilisers gave national agricultural productivity a huge boost. It directly affects the nation’s ability to sustain its large and ever-growing population. There is a positive correlation between the fertilizer consumption of foodgrains and the production of fertilisers in India, showing that their introduction has helped move India from a situation of scarcity to security and self-reliance in production. India has vast agricultural farmlands.

However, due to a multitude of factors, it is not possible to just expand its cultivation area in order to increase its production capacity. Fertilizers have helped increase the vertical capacity of the existing landholdings, i.e., producing more on the land already available, without needing to create more agricultural land. 

The increase in production has also given confidence to the government to enact the National Food Security Act, which ensures subsidised foodgrains to approximately two-thirds of the population of the country.

Moreover, steady production has also helped the nation create ample buffer stocks, creating a strong reserve to protect against shocks in the global market.

The heavy subsidisation of fertilizer inputs has helped small and medium farmers to increase their produce, and in turn helped stabilize domestic food prices. Multiple welfare schemes, such as the PM-POSHAN scheme and the midday meals scheme, have been successfully implemented due to the nation achieving a broad self-sufficiency in food production, with the introduction of fertilizers being a very important contributing factor.

ECONOMIC IMPORTANCE OF THE FERTILIZER INDUSTRY:

Agriculture contributes about 16% to India’s GDP, and is a part of the primary sector, which forms the largest portion, and the base of the workforce and the economy as a whole. Hence, it is essentially a catalyst for national industrial output, rural income and macroeconomic stability.

A major spark powering the growth of this sector is the presence of fertilizers. They are responsible for about half of India’s agricultural yield, and adding one kg of fertilizers can help increase yield by about 13 kg. This helps sustain incomes and livelihoods for small and marginal landholders, making up an overwhelming 80% of farmers across the country.

Subsidies on fertilizers are allocated about 3% of India’s national expenditure, and the heavy spending on this is more or less justified, as a large yield is paramount to the sustainability and stability of the nation's economy. This exercise functions as a massive wealth transfer, with the aim of protecting food prices, shielding the public from global energy shocks, and anchoring food inflation. 

The chemical industry, and more specifically the fertilizer industry, are witnessing a boom in the amount of FDI. Moreover, this is an industry that contributes to about 8.1% of India’s manufacturing GVA (Gross Value Added), and about 1.2% of the national GVA.

However, India’s fertilizer industry still heavily relies on global supply chains, with imports expected to reach a record high. This is the caveat to India’s self-sufficiency- it is still largely dependent on inputs and finished fertilizer products from abroad- and a crisis like the current one or the Russo-Ukraine war could pose a significant threat to the industry and its development.

EFFECTS OF CONFLICTS:

The US-Iran conflict, and consequently the blockading of the Strait of Hormuz, has had a significant hit on the fertilizer industry of India. India relies on Liquefied Natural Gas (LNG) from the Gulf region for its domestic nitrogen fertilizer production. The nation is one of the top importers of several critical fertilizer products from the Gulf region such as Ammonia, urea, and Diammonium phosphate.

Shipping restrictions that are a result of the blockade have driven sharp increases in prices of both energy and fertilizer. This effectively counteracts the Indian government’s moves to subsidise these fertilizer products, and makes it relatively more expensive for such incentives to be provided. 

The Russo-Ukrainian war in the early 2020s also underlined how conflicts distort supply in markets. As an effect of both nations, especially Russia, effectively pulling their resources out of the global supply chain, alongside a blockade in the Black Sea region, has triggered an escalation in prices and widespread shortages.

India, over the years, increased its dependence on Russian fertilizer inputs, with imports growing by almost 323.8% from 2021-22 to 2022-23, not only highlighting the trust New Delhi placed on Moscow in terms of being a key trade partner, but also emphasising Russia’s role as the largest producer and exporter of Fertilizers in the world

The conflicts mentioned above have a huge butterfly effect, that not only affects the primary sectors but also the industrial sector heavily, as a lot of the domestically available resources and materials are needed to keep the industry afloat during these times. India has ample reserves to suffice for the Kharif (Monsoon) season, but then if standoffs get prolonged, there is a looming risk of multiple cycles getting affected.

ENVIRONMENTAL IMPACT OF FERTILIZER:

Excessive use of fertilizers has multiple ill effects on the environment. As mentioned earlier, it could cause long-term damage to the soil’s fertility, in addition to severely contaminating the water table, due to the leaching of nitrates produced by fertilizers into the groundwater. 

Overuse, in turn, is promoted by the heavy subsidization of urea and similar chemical fertilizers. Hence, an increase in overall crop yield comes with a side effect, i.e., the depletion of soil fertility and skewing of the NPK ratio in the soil.

Moreover, the excessive use of chemical fertilizers has also resulted in accelerated greenhouse gas emissions, due to soil bacteria breaking down the excess nitrogen. A country like India, still very much an agrarian dependent, could ill afford widespread depletion of its soil resources. 

LESSONS FROM ABROAD:

India needs a rework in its fertilizer strategy, and can look for inspiration from successful methods implemented by other nations. 

China is a key producer and exporter of fertilizers. In recent years, it has adopted many strategies to help reduce dependence on Chemical Fertilizers. Multiple policy changes have been adopted in the recent past, to facilitate the same.

The Zero Growth action plan, launched by the Ministry of Agriculture, sets strict caps to ensure zero or negative growth in the usage of chemical fertilizers. It aims at shifting industry focus from increasing yield via excessive output, to sustainable, high quality agricultural development.

China has also provided incentives in recent times to those switching from organic fertilizers to biofertilizers. This, in addition to promoting the cultivation of leguminous cover crops, helps in nitrogen fixation in the soil, which is extremely important to increase the nitrogen content in the soil.

Moreover, in order to protect domestic food supply and stabilize internal prices, it also actively restricts exports of key fertilizer products, to counteract the effect of global supply shocks and price inflation. 

Indonesia has focused on control upstream. It has lessened, but not completely eliminated, sensitivity to fluctuations in international prices by giving domestic gas allocation for fertilizer production top priority and creating a coordinated, state-backed supply chain. The lesson here is clear: energy policy and fertilizer policy are inextricably linked.

Scarcity has spurred creativity in Israel. By delivering nutrients straight to plant roots, precision irrigation and fertigation technologies significantly increase absorption efficiency. As a result, there is less requirement for imports per unit of output due to greater productivity and decreased fertilizer intensity.

Brazil has embraced a soil-first strategy in recent times. Although it is still heavily reliant on imports, it has increased fertilizer efficiency through large-scale soil correction and crop-specific nutrient management. The goal has been to maximize each fertilizer unit's productivity.

An evident similarity between the cases of each of these nations is that they do not intend to completely eliminate dependence. Instead, they have chosen to reduce their reliance on imports, and optimize utilization of the inputs available to them- strategies from which India could gain some inspiration.

INDIA'S STRATEGY, AND SUGGESTED MODIFICATIONS TO THE SAME:

The state has implemented measures, in order to reduce its dependence on chemical fertilizers.

The PM-PRANAM Scheme is an initiative that incentivizes states and union territories to reduce their consumption of chemical fertilizers, and adopt organic alternatives.

Moreover, the government has started promoting Nano Urea and Nano DAP, which consist of nutrients packed into nanomaterials, as they have a better absorption efficiency. Moreover, it has also advocated for the use of Neem-coated urea, which works on a slow-release mechanism, preventing loss of nitrogen through leaching and evaporation.

These initiatives have accompanied a broader effort to strengthen domestic fertilizer production, with urea production increasing from 225 lakh metric tonnes (LMT) in 2014–15 to a record 314.07 LMT in 2023–24, while total fertilizer production rose from 385.39 LMT to 503.35 LMT during the same period. There have also been measures and schemes implemented by the government in order to increase the usage of natural and organic fertilisers.

Financial assistance for procuring bio-fertilisers like Rhizobium and Azotobacter, in addition to schemes such as the GOBAR-Dhan scheme, to promote the production of organic fertilisers, has been proposed in recent times.

Simultaneously, production of P&K fertilisers has increased from 159.54 LMT in 2014–15 to a record 211.22 LMT in 2024–25, underlining efforts in increasing domestic supply.

An increase in incentives that promote a switch to eco-friendly fertiliser options, provision of subsidised bio-fertilisers and nano-fertilisers, would help India offset the physical effects of the overuse of chemical fertilisers.

Moreover, to promote self-sufficiency in the production of fertilizers in general, the domestic production capacity should be increased, by the commissioning of multiple plants producing the same. In this regard, six new urea plants have already helped increase production by 76.2 LMT of annual production capacity.

This would reduce New Delhi’s dependency on foreign trade to fulfill its fertilizer requirements. Unlike China however, domestic reserve of the materials for the synthesis of fertilizers, is comparatively low.

Hence, self sufficiency in this aspect is unlikely. This apparent disadvantage can be overcome by robust, long term, and diverse diplomatic agreements, with states with large reserves of raw materials, in order to secure the supply chain.

This shouldn’t be limited to a single region, as a disruption/blockade (such as the ensuing situation in the Strait of Hormuz), should not severely affect the supply of raw materials. Strategic investments could also be made in overseas mining and exploration projects, as that would ensure long term access to raw materials, such as phosphates, natural gas etc.

Fertilizers remain indispensable to India's food security, agricultural productivity, and economic stability. However, the nation's continued dependence on imported raw materials and fertilizer products, coupled with the environmental costs of excessive chemical fertilizer use, presents significant long-term challenges.

Recent geopolitical disruptions, including the conflicts in the Middle East and the Russo-Ukrainian war, have highlighted the vulnerability of India's fertiliser supply chains, while highlighting the need for a more refined strategy, greater resilience with respect to the same.

Steps have been taken in the recent past by the Government of India to reduce India’s dependence on chemical fertilisers.

However, India must further diversify import sources, expand domestic production capacity, and encourage sustainable alternatives. Balancing production with environmental sustainability and strategic self-sufficiency will be crucial steps to protecting India’s primary sector from external shocks and resource degradation, while helping usher some welcome changes into the sector.

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BY DEEPAK SAI SHANKAR

INDUSTRY & INNOVATION CENTRE

TEAM GEOSTRATA

info@thegeostrata.com