Green Shoots: Fertiliser industry gears up for the next growth phase in India

Industry’s growth is driven by increasing agricultural productivity needs, and a shift towards sustainable farming practices

In India, the fertilizer industry is a key pillar supporting agriculture, an essential driver of the country’s economy and food security. Valued at around US$ 10.8 billion in 2024, the sector is projected to reach US$ 14 billion by 2030, growing at a CAGR of 4.2 per cent. This growth is fueled by rising demands for higher agricultural productivity, government support for domestic fertilizer production, and a growing emphasis on sustainable farming practices, including the use of bio-fertilizers.

Consumption patterns reflected a modest growth, with total fertilizer consumption reaching 64.84 MMT, marking a 1.6 per cent increase from the previous year. Urea remained the predominant fertilizer consumed at 35.78 MMT, a slight rise of 0.2 per cent. DAP consumption increased by 3.8 per cent to 10.81 MMT, and NP/NPK complex fertilizers saw a 9.9 per cent uptick to 11.07 MMT. However, SSP consumption declined by 9.4 per cent to 4.54 MMT.  

In 2024, the Indian fertilizers industry experienced several significant developments across production, consumption, imports, technological advancements, and policy initiatives. Total fertilizer production reached approximately 41.8 million metric tons (MMT), with urea production increasing by 4.7 per cent and NP/NPK complex fertilizers witnessing a substantial 20.7 per cent rise compared to the previous year. Conversely, the production of Di-Ammonium Phosphate (DAP) and Single Super Phosphate (SSP) declined by 40.9 per cent and 30.8 per cent, respectively. 

On the import front, India imported fertilizers worth over Rs. 86,500 crore in the fiscal year 2024, primarily comprising manufactured fertilizers.  Notably, from April to December 2024, fertilizer imports totaled 23.54 MMT, a decrease from 25.56 MMT during the same period in the previous year. Paradip Port emerged as the leading hub, handling 5.13 MMT of these imports.  

Major Developments

The fertilizers industry in India has been undergoing a series of strategic developments aimed at strengthening self-reliance, improving efficiency, and ensuring sustainability. One of the key developments is the government’s continued thrust on the revival of urea plants under the New Investment Policy (NIP) and the ‘Atmanirbhar Bharat’ initiative. Several dormant public sector fertilizer units have been revived, including the Gorakhpur and Ramagundam plants, with new projects also underway in Sindri and Barauni. These efforts aim to reduce India’s dependence on urea imports, which still account for a significant portion of domestic consumption.

There has also been a strategic shift toward balanced nutrient management, with the government promoting the use of alternative fertilizers like nano urea and bio-fertilizers. IFFCO’s commercial rollout of nano urea and plans for setting up new production units have garnered significant attention. This innovation is seen as a game changer for reducing excessive urea usage, improving soil health, and cutting down subsidy costs.

On the policy front, the introduction of the Direct Benefit Transfer (DBT) system in fertilizers has improved transparency and reduced leakages in subsidy disbursement. The government has also announced the “One Nation One Fertilizer” scheme to streamline branding and prevent duplication, though it has received mixed reactions from private players.

Private sector involvement is increasing, with companies like Coromandel International and Chambal Fertilizers expanding their capacity and investing in backward integration projects to secure raw material supply. The exploration of joint ventures abroad, particularly in Morocco, Jordan, and Russia for sourcing phosphatic and potassic fertilizers, continues to be part of India’s long-term strategy to secure its nutrient needs.

Digitization and automation across the supply chain, from manufacturing to retail distribution, have also gained momentum. Companies are investing in technology to ensure better demand forecasting, real-time inventory management, and improved farmer outreach through mobile platforms and digital advisory services.

In terms of environmental responsibility, there is growing emphasis on sustainable practices. The industry is aligning with global ESG norms by adopting energy-efficient technologies, reducing carbon footprints, and enhancing water management practices within fertilizer production units.

Increased R&D Push

India’s fertilizers industry is experiencing a wave of innovation driven by the latest research and development efforts focused on sustainability, efficiency, and self-reliance. A major breakthrough is the commercialization of nano fertilizers, particularly nano urea and nano DAP, spearheaded by the Indian Farmers Fertiliser Cooperative Limited (IFFCO). These nano variants, delivered in liquid form, significantly enhance nutrient uptake while reducing the volume of fertilizer required per acre, thereby cutting costs and environmental load. As of mid-2024, nearly 755 million bottles of nano urea and 69 million bottles of nano DAP have been utilized by farmers across the country, reflecting growing acceptance. IFFCO has also expanded its production targets to 400 million bottles of nano urea plus and 200 million bottles of nano DAP for FY 2024-25. 

Efforts to decarbonize urea production are also underway, focusing on transitioning to renewable ammonia as a feedstock. This shift aims to reduce greenhouse gas emissions associated with traditional urea manufacturing processes, aligning with global climate goals and promoting sustainable agricultural practices. In parallel, public and private sector players are investing in R&D for bio-fertilizers, slow-release nutrient technologies, and customized soil health-based formulations. Collaborations with research institutes and agri-tech startups are also enabling the integration of AI, remote sensing, and precision farming tools to align fertilizer use with specific crop and soil needs. These developments signal a strategic shift in India’s fertilizer ecosystem from volume-driven production to innovation-led efficiency and environmental responsibility.

Policy Interventions 

Government policies have significantly influenced the industry, particularly through subsidies and support for domestic production. Initiatives aimed at reducing import dependency and enhancing self-sufficiency have led to investments in new urea plants and the promotion of alternative fertilizers. Additionally, the government's focus on balanced nutrient management and sustainable agriculture has encouraged the use of organic and bio-fertilizers. Subsidies for phosphatic and potassic fertilizers, along with investments in new urea plants, aim to enhance domestic production capacities and reduce import dependencies. Furthermore, the promotion of balanced nutrient management and sustainable agriculture practices is encouraging the adoption of alternative fertilizers.

Policy initiatives also played a crucial role in shaping the industry. In December 2024, the Indian government approved a subsidy of Rs. 73,100 crore (approximately $860 million) for phosphatic and potassic (P&K) fertilizers for the financial year 2024-25, aiming to ensure affordable access to these vital inputs for farmers.  Additionally, the government announced plans to invest Rs. 10,000 crore to establish a new urea plant, further bolstering domestic production capacity and reducing import dependency.

Despite these positive developments, the industry faces challenges such as fluctuating raw material prices, environmental concerns related to the overuse of chemical fertilizers, and the need for infrastructure improvements in storage and distribution. Addressing these issues is crucial for ensuring the long-term sustainability and efficiency of the fertilizer sector in India.

Elusive Challenges

The fertilizers industry in India, while critical to the nation’s food security and agricultural productivity, faces a number of structural and operational challenges that impact its efficiency, sustainability, and long-term growth. One of the foremost challenges is the heavy dependence on imports for raw materials and finished fertilizers, particularly phosphatic and potassic varieties. Despite efforts to boost domestic production, India remains vulnerable to global price volatility and geopolitical disruptions in supply chains, which in turn affect pricing and availability for farmers.

Another persistent issue is the growing fiscal burden of fertilizer subsidies. While these subsidies are crucial to ensure affordability for farmers, they place a significant strain on the government’s finances. In recent years, the fertilizer subsidy bill has escalated sharply, and efforts to reform the subsidy structure—such as the introduction of the Direct Benefit Transfer (DBT) system—have met with mixed success. Additionally, the pricing imbalance caused by urea being heavily subsidized compared to other nutrients has led to imbalanced fertilizer use, resulting in declining soil health and reduced agricultural efficiency.

The industry also grapples with aging infrastructure in several public sector units, which affects production efficiency and increases operational costs. Though modernization programs have been initiated, progress is often slow due to bureaucratic hurdles and regulatory delays. Technological adoption in manufacturing and distribution remains uneven across the sector, with private players moving faster on digital integration than their public counterparts.

Environmental concerns have increasingly come to the fore. Excessive and unbalanced use of chemical fertilizers, particularly urea, has led to soil degradation, water contamination, and greenhouse gas emissions. While the government is promoting the use of bio-fertilizers and introducing innovative solutions like nano urea, widespread adoption remains limited due to lack of awareness, training, and distribution infrastructure among farmers.

Another challenge is the logistics and distribution network, especially in remote rural areas. Fertilizer supply is often delayed due to inadequate warehousing and inefficient last-mile delivery mechanisms, particularly during peak agricultural seasons. This not only disrupts crop cycles but also leads to hoarding and price manipulation at the retail level.

Policy uncertainties and regulatory complexities further complicate the operating environment. Frequent changes in import duties, subsidy formulas, and compliance requirements create ambiguity for both domestic producers and importers. Moreover, delays in subsidy reimbursements and lack of clarity on long-term policy direction inhibit private sector investments and innovation in the industry.

Growth Projections Remain Optimistic

The Indian fertilizers industry is poised for substantial growth in the coming years, driven by factors such as increasing agricultural productivity, government initiatives, and a shift toward sustainable farming practices. Projections indicate that the market size, valued at approximately US$ 10.8 billion in 2024, is expected to reach US$ 14 billion by 2030, reflecting a compound annual growth rate (CAGR) of around 4.2 per cent.  Other analyses suggest a more accelerated expansion, with the market potentially growing from US$ 43.54 billion in 2024 to US$ 74.06 billion by 2033, at a CAGR of 6.08 per cent.  

Urea fertilizers are projected to maintain their dominance in the market due to their critical role in nitrogen supply and the government's subsidy support, which enhances affordability for farmers.  Additionally, the specialty fertilizer segment, including products like bio-fertilizers and nano-fertilizers, is expected to experience significant growth. The specialty fertilizer market is anticipated to reach US$ 1.77 billion by 2030, growing at a CAGR of 6.80 per cent from US$ 1.27 billion in 2025.  

The Indian fertilizers industry is on a growth trajectory, supported by favorable market dynamics and policy interventions. The focus on increasing domestic production, promoting sustainable practices, and enhancing efficiency is expected to drive the industry toward a more resilient and self-reliant future.

Fertilizer Footprint Expands in India

Bottlenecks  

• High Import Dependence – Especially for phosphatic and potassic fertilizers.

• Rising Subsidy Burden – Significant strain on government finances.

• Soil Imbalance – Overuse of urea leads to nutrient imbalance and soil degradation.

• Delayed Subsidy Payments – Impacts cash flow of manufacturers and retailers.

• Logistics Issues – Inefficiencies in last-mile delivery and storage.

• Environmental Concerns – Fertilizer runoff causes pollution and water contamination.

• Low Adoption of Alternatives – Limited use of bio-fertilizers and nano variants.

• Farmer Awareness Gaps – Lack of knowledge on balanced fertilizer use.