Supply cuts from China prompt India to step up high-end fertilizer capacity

Mint

5 days ago

New Delhi: The Centre is looking at ways to step up the production of specialty fertilizers for high value fruit, vegetables and flowers, amid a supply disruption from China, a senior government official told Mint.
Preliminary discussions have already been held between the government and leading state-owned, cooperative and private sector fertilizer producers, the official said.
Specialty fertilizers include polymer-coated urea that is released slowly into the soil and is available to plants over a long period, chelated micronutrients that are effective in alkaline soil, water-soluble fertilizers such as monoammonium phosphate and potassium nitrate, and stabilized nitrogen fertilizers with urease inhibitors (NBPT) which allow efficient nitrogen use on soil.
"We have asked the manufacturers including companies in public sector and private sector to increase availability of specialty fertilizers," said the person quoted above, who spoke on condition of not being named.
The development assumes significance given India's heavy reliance on China for supplies of specialty fertilizers. Nearly 80% of India's specialty fertilizer imports including water-soluble nutrients, liquid foliar sprays, slow and controlled-release formulations, and bio-stimulants are sourced from Chinese manufacturers, according to industry estimates.
Chinese supplies have been disrupted for the past two months with authorities in that country using various procedures to block exports to India without imposing as ban, The Economic Times reported on 26 June.
Nishant Kanodia, promoter and chairman, Matix Fertilisers & Chemicals Ltd, said, "India's growing focus on sustainable and high-efficiency agriculture is creating a meaningful shift in the fertilizer landscape. While our entry into this segment is recent, we are committed to building capabilities that contribute to India's long-term self-reliance and soil health goals."
An IFFCO (Indian Farmers Fertiliser Cooperative Ltd) spokesperson said that the cooperative started production of water soluble and specialty fertilizers since 2011. The current capacity is 15,000 tonnes per annum.
Queries emailed to other leading producers—Kribhco, Coromandal International Ltd, Zuari Farm Hub, Deepak Fertilisers, Yara fertilisers—Department of Fertilizers and Department of Agriculture and Farmers Welfare on 21 July, remained unanswered at the time of publishing.
Rajib Chakraborty, national president, Soluble Fertilizer Industry Association (SFIA), said, 'Until recently, India lacked the technology to produce two of the most essential WSF (water-soluble fertilizer) grades, Mono Ammonium Phosphate (MAP) and Calcium Nitrate alongside other important grades. Addressing this gap, Ishita International has developed an integrated process, Indian raw material based technology, capable of producing MAP, liquid Calcium Magnesium, Calcium Nitrate, Calcium nitrate with Boron and several other WSFs in a single process."
The pilot plant for this project is currently under commissioning, with support from the government.
"This start-up is technologically equipped with an integrated Water-Soluble Fertilizer (WSF) production capacity of 10,000 tonnes of MAP and an additional 5,000–7,000 tonnes of other compound WSFs. The company is currently exploring investment opportunities to scale up commercial production and scale up quickly to fill the supply chain gap," said Yogesh Chavhan, business development-manager, WSF, at Nagpur-based Ishita International.
Meanwhile, producers of NPK formulations are operating at full capacity but are facing challenges due to a limited availability of raw materials. This is largely because basic WSFs themselves serve as key inputs for these formulations. Despite the constraints, these developments have opened new avenues for indigenous production and present a significant export opportunity to neighbouring countries, according to Rajib.
Specialty fertilizer segment comprises various categories, including water soluble fertilizers, sulphur products, micronutrients and liquid fertilizers.
"Demand for specialty fertilizers has been estimated to be around 1.2-1.3 million tonnes annually, as in FY25. Among the major categories, micronutrients has the largest share of ~50-55% in total specialty fertilizer consumption followed by WSF (~25-30 %), sulphur (approx. 12-15%) and liquid fertilizers," said Pushan Sharma, director, Crisil Intelligence.
In 2022, the specialty fertilizers market in India was valued at approximately $1.46 billion, while the overall fertilizer market stood at around $40.5 billion in 2023. According to industry stakeholders, specialty fertilizers account for only 3% to 5% of the total fertilizer market. There is no subsidy part involved in specialty fertilizers.
India is significantly dependent on raw materials and finished specialty fertilizers from China, Russia, Norway, Tunisia and Morocco.
India's dependency on imports varies across different specialty fertilizer categories. "For Water Soluble Fertilizers (WSF), the country is heavily reliant on imports, lacking significant production capacity due to the products being blended mixtures of various chemicals that are not readily available in India," said Pushan.
The production process for water-soluble fertilizers in India primarily involves blending, with some grades undergoing micronutrient fortification, but without chemical reactions. As a result, India remains dependent on imports of various water-soluble fertilizer grades to manufacture other fortified grades.
In the case of Sulphur, India's dependency on imports is medium to high, with companies such as Coromandel International Limited, Deepak Fertilizer, and National Fertilizers Limited relying on molten sulphur from Middle Eastern countries for sulphur production, according to Crisil Intelligence.
For High-Value Micronutrients, the dependency on imports is moderate, as some key raw materials, including EDTA di-sodium, and finished goods like Di Sodium Octa Borate Tetra Hydrate, are largely imported.
According to Crisil, the water-soluble fertilizer category is expected to experience production disruptions due to India's historical reliance on China for raw materials and finished goods. Specifically, products like MAP (Mono Ammonium Phosphate) and CN (Calcium Nitrate) have been largely imported from China, which offered optimal quality and pricing, although alternative sources are available.
'Following China's imposition of an export ban on specialty fertilizers, industry experts report a substantial increase of approximately 50-60% in the shipment cost of Calcium Nitrate from other countries. Moreover, China is reportedly exporting these products to other nations, which are then being trans-shipped to India, resulting in higher costs and longer lead times," informed Pushan.
According to SFIA, nearly every fertilizer company in India is engaged in trading, repacking and selling specialty fertilizers, yet very few are actual producers. The market is dominated by traders due to regulatory limitations and the absence of indigenous technologies, which have historically prevented the domestic manufacturing ecosystem particularly MSMEs from scaling up.
As a result, despite rising demand, Indian production capacity has remained restricted. However, some of the emerging entities and startups have demonstrated strong potential for rapid growth and expansion in this segment. Their innovation, agility, and production readiness position them well to lead the next wave of self-reliant, Make-in-India development in the specialty fertilizer space.
When asked whether the production can be scaled instantly, Rajib said, 'Scaling production is possible where there is already an unutilized capacity. It does not apply where there is no technology and very basic level of production activity is performed. Whether importing product or importing technology, dependency on external sources remains the same. Government is rightfully investing in 'Import Substitution' through promoting 100% indigenous technology. The country that holds the know-how to scale efficiently and sustainably owns the market, regardless of who first developed the idea and it's happening in India now."