Parliamentary Committee Observations and Recommendations on the Fertilizer Sector

Observations

1. Link to Food Security:

   • Fertilizers play a critical role in maintaining agricultural productivity and food security. The committee noted that India’s dependency on fertilizer imports—25% for urea, 90% for phosphates, and 100% for potash—poses a significant challenge to India’s self-reliance and food sovereignty.

   • The Department of Investment and Public Asset Management (DIPAM) had denied the fertilizer sector strategic status despite its importance to food security.

2. Low Market Share of Fertilizer PSUs:

   • Public Sector Undertakings (PSUs) contribute around 25% of urea and 11% of non-urea fertilizer production. In contrast, the private sector dominates, with 57% of total fertilizer production in 2023–24.

   • PSUs play a stabilizing role in pricing and ensuring affordability for small and marginal farmers through government-subsidized fertilizer distribution.

3. Strategic Importance of Fertilizer PSUs:

   • The committee emphasized that fertilizer PSUs are essential for stabilizing prices, ensuring supply during disasters, and securing long-term food security. Despite this, they are underutilized, and their potential to support food security remains constrained.

Recommendations

1. Classify Fertilizer Sector as ‘Strategic’:

   • To achieve self-reliance under the Atmanirbhar Bharat initiative, the committee recommended reclassifying the fertilizer sector as "strategic" to attract more investment, technology, and policy attention.

2. Revitalizing Fertilizer PSUs:

   • A dedicated mission should be launched to upgrade technology, diversify products, and adopt sustainable practices in public sector units (PSUs). The committee also noted successful revitalization, with the reopening of closed units contributing 7.62 million tonnes (MT) to annual urea production.

How Integral Are Fertilizers to India’s Agriculture and Economy?

1. Agriculture’s Economic Footprint:

   • Agriculture contributes nearly 16% to India's GDP and sustains over 46% of the population, forming a foundation for livelihoods across rural India.

2. Fertilizer Production and Consumption Trends:

   • India is the second-largest user and third-largest producer of fertilizers globally.

   • In 2023–24, total fertilizer production reached 503.35 lakh metric tonnes (LMT), with the private sector accounting for 57.77% of total production.

   • India consumed 601 LMT of fertilizers in 2023–24, producing 503 LMT domestically and importing 177 LMT.

3. Import Dependency:

   • Self-sufficiency levels reached 87% for urea, 90% for NPK (Nitrogen, Phosphorus, and Potassium), but only 40% for DAP (Di-Ammonium Phosphate). Muriate of Potash (MOP) remains 100% imported.

India’s Fertilizer Sector Evolution Towards Sustainability and Self-Reliance

1. Brand Unification under ONOF:

   • The One Nation One Fertilizer (ONOF) initiative standardizes brands for government-subsidized fertilizers (e.g., Bharat Urea, Bharat DAP) to improve quality control and streamline government support.

2. Sustainable Fertilizer Practices:

   • Nano-fertilizers like nano-urea and nano-DAP provide slow-release nutrients that reduce wastage and improve absorption.

   • Neem-coated urea enhances nitrogen efficiency and requires less urea to achieve the same results.

   • The PM-PRANAM scheme encourages reduced chemical fertilizer use and promotes organic alternatives with state incentives linked to performance.

   • The Bio-fertilizers and Soil Health Card Scheme emphasizes balanced nutrient input and tailored soil management for optimal yields.

3. Technological & Digital Infrastructure:

   • iFMS (Integrated Fertilizer Management System) helps track fertilizer movement in real-time.

   • mFMS (Mobile FMS) supports dealer registration, stock monitoring, and Direct Benefit Transfer (DBT) via mobile platforms.

Challenges in Categorizing the Fertilizer Sector as ‘Strategic’

1. Global Integration and Supply Diversification:

   • India has long-term DAP supply agreements with Saudi Arabia and Morocco, reducing the need to maintain large strategic production reserves for phosphates.

2. Technological Obsolescence:

   • Older PSU plants face issues like low efficiency, high input costs, and the need for heavy capital investment to modernize. This raises questions about the effectiveness of granting "strategic" status without major reforms.

3. Policy Inconsistency and Sectoral Ambiguity:

   • There is a contradiction between treating fertilizers as essential for food security (Agriculture Ministry) versus a non-strategic commercial sector (DIPAM). This lack of coherence in policy makes inter-ministerial consensus difficult and slows down necessary reforms.

How Can India Make its Fertilizer Sector Self-Reliant?

1. Boost Domestic Production:

   • India should prioritize ensuring that existing units operate profitably, while also focusing on the revival of closed plants. The New Investment Policy (NIP) 2012 can aid in reducing import dependence and promoting self-sufficiency.

2. Innovation & Sustainability:

   • Investment in R&D to develop new fertilizer formulations, eco-friendly production technologies, and efficient resource use will be key to improving productivity and sustainability in the long run.

3. Promotion of Bio-fertilizers and Nano-fertilizers:

   • The PM-PRANAM scheme can be expanded to encourage the use of bio-fertilizers and nano-fertilizers, alongside traditional fertilizers, to reduce dependency on imports and improve soil health.

4. Public-Private Collaboration:

   • Encouraging public-private partnerships (PPPs) for investment in research, innovation, and increasing production capacity can accelerate the transition to a self-reliant fertilizer sector.

5. Establishment of Regional Manufacturing Hubs:

   • Developing fertilizer clusters near key agricultural zones will cut logistics costs and improve distribution efficiency.

6. Financial Incentives:

   • The Production Linked Incentive (PLI) scheme can be introduced for nano-fertilizer production to incentivize manufacturers and promote adoption.

7. Integration with National Nutrient Management Programs:

   • Nano-fertilizers should be integrated into national nutrient management programs, ensuring balanced use of conventional and sustainable fertilizers.

Conclusion

The Parliamentary Committee’s observations and recommendations underscore the critical role fertilizers play in ensuring food security, especially with India’s growing import dependency. By reclassifying the fertilizer sector as “strategic,” India can promote self-reliance, reduce import dependence, and ensure that its agricultural sector remains robust and sustainable. Addressing challenges like technological obsolescence and policy incoherence, while focusing on innovation and public-private collaboration, will be essential to achieving these goals.