Indian Fertilizer Industry

Released on: October 2, 2008, 10:17 pm

Press Release Author: bharatbook

Industry: Industrial

Press Release Summary: launches a latest report which gives a detail
information about "Indian Fertilizer Industry"

Press Release Body: added a new report on "Indian Fertilizer
Industry" (

The Indian fertilizer industry has come a long way since its early days post
independence. India today is one of the largest producer and consumer of Fertilisers
in the world. India’s production in terms of nutrients (N & P) reached a level of
155 lakh MT in 2005-06 from 0.39 lakh MT in 1951-52.Similarly, consumption of
fertilizers in terms of nutrients (NPK) has also grown from about 0.66 lakh MT in
1951-52 to nearly 184 lakh MT in 2004-05. The Indian Fertilizer industry, given its
strategic importance in ensuring self– sufficiency of food grain production in the
country, has for decades,been under Government control. The government has over the
years, provided subsidies/concessions through the fertilizer companies to farmers
and the manufacturers have been compensated through various schemes. Though the
Government control helped in meeting the objective of ensuring creation of
capacities and ultimately achieving self-sufficiency in food grain production, it
did not encourage improving efficiencies in the
sector. With the burgeoning subsidy bill and the need to focus on fiscal prudence,
Government polices in recent times are aimed at encouraging efficiencies in the
sector. Policy measures like the new pricing scheme have made the operations of less
efficient players unviable. The Government polices today are oriented towards
achieving the stated objective of total deregulation in the sector. However, the
uncertainty over exact policy parameters and absence of a comprehensive long term
policy has not augured well for the industry. For instance, the financial year
2006-07 began with practically no clarity on the policy parameters for both
nitrogenous and phosphatic fertilizers. The policy parameters for third stage of the
new pricing scheme for urea which was to be implemented from the beginning of the
current financial year (FY07) are yet to be announced and the implementation of the
Prof. Abhijith Sen Committee report on phosphatic fertilizers is also pending. The
uncertain policy environment has also not encouraged any major investments in
domestic capacity. Another important issue confronting the sector is with respect to
the feedstock. Natural gas which is the main feedstock for production of nitrogenous
fertilizers is available in limited quantities and the industry competes with the
power sector for its share. With the Government policy favouring conversion to gas
based units, the demand for gas is only expected to go up in the future, which may
in turn lead to further shortages. Similarly, in the case of phosphates, on account
of the limited availability of phosphoric acid and rock phosphate in the country,
domestic units are dependent to a large extent on imports. In view of the limited
availability of the main feedstock within the country, fertiliser companies today
are exploring the possibility of setting up joint ventures abroad to tie up their
feedstock requirements. Though a few joint venture agreements have been signed with
respect to supply of phosphoric acid, only a couple of joint ventures have been
established with respect to urea. Domestic players have also not been able to enter
into long term gas supply agreements primarily due to differences over pricing.

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