Context:
The escalation of war-like situations in West Asia has triggered a significant hike in the prices of critical fertilizers such as Urea and DAP (Di-ammonium Phosphate). This is driven by rising crude oil prices and the shortage of Liquefied Natural Gas (LNG), which serves as a key feedstock for fertilizer production.
1. Market Dynamics: Urea and DAP Prices
- Price Projections: Urea and DAP prices are expected to breach the $1,000 per tonne mark due to supply disruptions and rising demand for India’s upcoming sowing season.
- Feedstock Dependency: Urea production is highly sensitive to the price of LNG, which is trending upward due to the conflict.
- Impact of Global Alliances: Fertilizer industry experts note that military actions by the U.S.-Israel alliance against Iran have triggered immediate price spikes (e.g., DAP reaching $530 per tonne in some regions).
2. India’s Fertilizer Statistics (April–December 2025-26)
Today, India stands as the second-largest consumer and the third-largest producer of fertilizers globally.
- Around 87% of urea consumption is domestically met.
- 90% of NPK Fertilizers are also produced within the country.
- However, for DAP, only about 40% comes from local production.
- In the case of Muriate of Potash (MOP), 100% is still imported.
- Sector-Wise Contribution (During 2023–24):
- The public sector contributed about 17.43% to total Fertilizer production.
- The cooperative sector accounted for 24.81%.
- The private sector contributed the largest share at 57.77%.
3. Global Resource Concentration
- Phosphate Reserves: Morocco holds 70% of the world’s phosphate reserves, which are essential for DAP production.
- Potash Producers: Canada and Belarus are the primary global producers of Potash.
4. Government’s Initiatives in the Fertilizer Sector
- Fertilizer Subsidy and Budgetary Support:
- For 2024–25, the Department of Fertilizers received a final budget of₹1,91,836 crore, a notable rise from the ₹1,68,131 crore originally allocated. This increase was made possible through supplementary demands approved by Parliament.
- Under the Nutrient Based Subsidy scheme, the allocation was raised from ₹45,000 crore in Budget Estimate (BE) 2024-25 to ₹54,310 crore, ensuring sustained support for phosphatic and potassic Fertilizers.
- Nano Fertilizer Initiatives: Nano Fertilizers are plant nutrients that are packed within very small particles called nanomaterials. This coating allows the nutrients to be released slowly and steadily into the soil. The controlled release ensures that plants absorb them more effectively and with less wastage.
- Neem Coated Urea (NCU): Neem-coated urea is urea fertilizer coated with neem oil that slows nitrogen release in soil. This improves crop growth, reduces nitrogen loss and fertilizer misuse, and allows farmers to use about 10% less urea for similar results.
- One Nation One Fertilizer (ONOF): One Nation One Fertilizer aims to ensure uniform branding and transparency by selling all subsidised fertilizers under the common “Bharat” brand (e.g., Bharat Urea, Bharat DAP), with the manufacturer’s name shown in smaller font.
| Nutrient Based Subsidy scheme The Government introduced the Nutrient Based Subsidy (NBS) scheme on 1 April 2010 for phosphatic and potassic Fertilizers. Under this scheme, a fixed subsidy is provided for subsidised P and K Fertilizers, including di-ammonium phosphate, based on their nutrient content. Coverage: Applicable to Phosphatic and Potassic (P&K) fertilizers, including DAP.Subsidy Basis: A fixed subsidy per nutrient content is announced annually or bi-annually.Pricing: The P&K fertilizer sector is decontrolled; companies can fix MRP, monitored by the government.Urea exclusion: Urea is not covered under NBS |
Consider the following statements with reference to the fertilizer Sector in India:
I. In the case of Muriate of Potash (MOP), 100% is still imported.
II. The public sector contributed about 57.43% to total Fertilizer production.
III. Neem-coated urea is urea fertilizer coated with neem oil that slows nitrogen release in soil.
Which of the following statements given above is/are correct?
(a) I only
(b) I and III only
(c) III only
(d) II and III only
Answer: B
Explanation:
• Statement I is correct: India lacks significant domestic reserves of potash. Consequently, 100% of the demand for Muriate of Potash (MOP) is met through imports, primarily from countries like Canada and Belarus.
• Statement II is incorrect: While the public sector plays a significant role, it does not dominate production to that extent. Based on current data, the cooperative sector (like IFFCO) and the private sector contribute the majority of production. For instance, recent data shows that local output for urea fell by 3% to 22.44 mt, while imports surged to 8 mt.
• Statement III is correct: Neem-coated urea is a specialized fertilizer where urea is coated with neem oil. This coating acts as a nitrification inhibitor, which slows down the rate of nitrogen release into the soil, thereby increasing nutrient-use efficiency and preventing misuse of urea for non-agricultural purposes.
