Last updated : August 22, 2026 9:04 am
India’s fertilizer strategy now combines aggressive diversification of supply sources, overseas asset creation, domestic capacity revival and expansion
Fertilizers remain central to agricultural productivity and food security in India. Balanced use of nitrogen, phosphorus, and potash nutrients supports higher crop yields, sustains soil health, and underpins the country’s ability to feed a 1.45 billion population while contributing to global food supplies. India’s fertilizer sector, however, operates within a highly import-dependent framework that has been tested repeatedly by global shocks since 2020. The result has been a necessary shift from a low-cost, just-in-time model toward a more diversified, risk-resilient structure.
High import dependence
India’s reliance on external sources is structural. For urea, dependence reaches 68–70 percent when natural gas, raw materials, and intermediates are included. Diammonium phosphate (DAP) dependence stands at approximately 98 percent, covering rock phosphate, phosphoric acid, and finished products. Potash dependence is total—100 percent—because India has no significant domestic primary sources. Until 2020, global availability was generally adequate and prices remained manageable. That equilibrium broke down under successive disruptions.
Series of disruptions since 2020
The period 2020–2022 marked the first major wave. The COVID-19 pandemic disrupted logistics and production. The Russia–Ukraine war, trade sanctions, and export restrictions followed. European supplies from Russia were affected; potash and phosphate flows from Russia and Belarus to India were interrupted; and the closure of Ukraine’s Yuzhny port compounded constraints.
Subsequent Middle Eastern conflicts added further pressure. The Israel–Hamas war, Houthi attacks in the Red Sea, and wider US–Israel–Iran tensions raised risks around the Strait of Hormuz. Damage or threats to energy assets across Qatar, Saudi Arabia, Bahrain, Kuwait, Iran, Abu Dhabi, and Oman affected refineries, pipelines, and gas infrastructure. Shipping constraints in the Strait of Hormuz tightened vessel availability, while higher energy and input costs filtered through the fertilizer value chain. Freight and insurance rates rose, and the industry faced renewed volatility.
These events exposed structural vulnerabilities: heavy dependence on volatile trade corridors (Strait of Hormuz, Black Sea), raw-material protectionism through export bans and licensing caps on urea, sulfur, and DAP, continued tethering of fertilizer production to natural-gas and coal prices, and logistical limits arising from slower growth in the commercial vessel fleet combined with stricter maritime emissions rules. The global decarbonization agenda itself faced temporary setbacks amid the turmoil.
Strategic resilience measures
Governments and agricultural enterprises have responded with multi-layered risk-mitigation strategies aimed at securing yields and safeguarding food security.
Supply sourcing diversification has been a priority. India has used diplomatic channels and foreign missions to secure long-term bilateral agreements with alternative suppliers. Overseas joint-venture plants, long-term supply contracts, asset acquisitions abroad, and sourcing from less conventional origins all dilute the impact of sudden export freezes or localized infrastructure failures.
Collective procurement and enhanced bargaining allow fragmented buyers to pool orders for ammonia, sulfur, and other inputs. This improves price transparency and strengthens negotiating leverage against concentrated global suppliers.
Transition to green nutrient technologies seeks to reduce exposure to fossil-fuel price shocks. Companies such as Yara International are advancing green hydrogen and green ammonia infrastructure. Localized green ammonia plants can buffer against international natural-gas volatility. India’s own green hydrogen and ammonia initiatives, including projects under the Strategic Interventions for Green Hydrogen Transition (SIGHT) program, form part of this longer-term decoupling effort. Technology maturity, renewable power availability, and project viability remain critical determinants of scale.
Demand management and nutrient efficiency help farmers cope with higher input prices. Precision agriculture tools, smart irrigation, balanced fertilization programs, and greater use of bio- and organic products maximize nutrient-use efficiency. These measures protect farm margins while moderating overall demand growth. Sourcing from Southeast Asian origins has also been explored as a complementary route.
New projects to strengthen availability
India has advanced a portfolio of domestic and overseas projects across the three major nutrients.
Ammonia and urea: Hindustan Urvarak & Rasayan Limited (HURL) is developing a 1.27 million metric tonnes per year brownfield ammonia-urea plant at Namrup through a joint venture. Rashtriya Chemicals and Fertilizers (RCF), National Fertilizers Ltd (NFL), and Indian Potash Ltd (IPL) signed a joint-venture agreement with Russia’s Uralchem for a 1.8–2 million tonnes per year urea plant in Samara, expected around 2027–2028. ACME Group has a Green Ammonia Purchase Agreement with the Solar Energy Corporation of India (SECI) for 370,000 tonnes per annum under the SIGHT program, involving substantial investment over a decade. Parallel efforts to expand compressed biogas (CBG) plants create potential bio-based methane feedstock for hydrogen and ammonia production, aligning with decarbonization goals.
Phosphates: Domestic rock-phosphate production remains concentrated in Rajasthan and Madhya Pradesh, with the Jhamarkotra mine accounting for the bulk of output. Even so, India continues to import 60–90 percent of its phosphatic raw-material needs because many deposits are low-grade or chemically complex and require intensive beneficiation. Recovery of phosphate from sewage sludge via struvite precipitation, wet-acid extraction, or thermochemical treatment of ash offers a circular-economy route. Overseas linkages include Paradeep Phosphates Limited’s long-term rock-phosphate arrangements with Morocco’s OCP Group, IFFCO’s joint ventures in Jordan and Senegal (including equity in ICS Senegal), and Coromandel International’s majority stake in Senegal’s Baobab Mining and Chemicals Corporation. Israel’s ICL Group opened a specialty water-soluble fertilizer plant in Maharashtra in March 2026.
Potash: The Nagaur–Ganganagar Evaporite Basin project in Rajasthan (extending into Punjab) is exploring indigenous sub-surface reserves under the Geological Survey of India and state entities. Gujarat State Fertilizers & Chemicals (GSFC) holds a strategic stake in Karnalyte Resources’ Wynyard solution-mining project in Saskatchewan, Canada, with planned production of 675,000 tonnes per year of granular potash (expandable in phases). Recovery of potash derived from molasses (PDM) from sugar and ethanol distillery spent wash provides an organic potassium source with a minimum 14.5 percent potash content, reducing reliance on imported muriate of potash.
Policy framework: toward urea self-sufficiency
Historical policy shaped the current landscape. The 1978 Retention Pricing Scheme, following Marathe Committee recommendations, offered an assured 12 percent return on net worth and encouraged public, private, and cooperative investments. Discovery of Bombay High gas and the HBJ pipeline supported rapid growth, enabling urea self-sufficiency by around 2000. Thereafter, domestic investment stagnated while demand continued to rise, and imports climbed. From 2010 onward, revival of closed units became a priority. Five brownfield plants—Ramagundam, Gorakhpur, Sindri, Barauni, and Talcher—were rebuilt for a combined 6.35 million tonnes per year of gas-based urea capacity. Additional capacity at Brahmaputra Valley Fertilizer Corporation Ltd (BVFCL) Namrup (1.27 million tonnes) brings the total potential addition from these efforts to roughly 8.5 million tonnes per year once fully operational. Even so, imports have remained necessary to bridge the gap between domestic production (around 30 million tonnes) and demand (around 40 million tonnes from 33 plants).
Geopolitical pressures have reinforced the case for a further push. The New Investment Policy for Urea (NIPU) 2026 aims to catalyze 8–9 new gas-based standard-capacity plants of 1.27 million tonnes each, adding approximately 10 million tonnes of annual capacity. Relative to the earlier NIP 2012 (which expired in 2019), key changes include separation of fixed and variable costs for greater subsidy transparency, an assured return on equity ranging from a minimum of 12 percent to a maximum of 16 percent, conversion of fixed costs to Indian rupees after four years to mitigate foreign-exchange risk, and applicability limited to new projects (excluding retrofits and revamps). The policy is expected to improve financial viability and generate significant savings per plant. It applies equally to public, private, and cooperative investors.
Complementing urea capacity expansion, the government continues to encourage domestic production of ammonium sulphate, ammonium nitrate, mono-ammonium phosphate, DAP, calcium ammonium nitrate, urea ammonium nitrate, coated urea, nano-urea, and nano-DAP.
Outlook
India’s fertilizer strategy now combines aggressive diversification of supply sources, overseas asset creation, domestic capacity revival and expansion, nutrient-use efficiency, and gradual adoption of greener production routes. These measures do not eliminate exposure to geopolitical or energy-market shocks, but they reduce single-point vulnerabilities and improve the country’s ability to maintain agricultural productivity and food security under stress. Sustained implementation of the new urea investment framework, successful commissioning of announced projects, and continued progress on phosphate and potash security will determine how resilient the system becomes in the decade ahead.
(Mr. Nair is a Former Secretary to Chief Minister and Chairperson, Public Sector Restructuring & Audit Board, Government of Kerala.)
(Disclaimer: The views expressed in the articles are strictly those of the author and do not necessarily reflect the views of the Indian Chemical News.)