Chapter 2
The fertilizer sector

The history of the Indian fertilizer industry dates back to 1906, when the first fertilizer factory opened at Ranipet (Tamil Nadu). Since then, there have been major developments in terms of both the quantity and the types of fertilizers produced, the technologies used and the feedstocks employed. The fertilizer industry in India is in the core sector and second to steel in terms of investment.

Prior to 1960/61, India produced only straight nitrogenous fertilizers [ammonium sulphate (AS), urea, calcium ammonium nitrate (CAN), ammonium chloride and single superphosphate (SSP)]. The production of NP complex fertilizers commenced in 1960/61. Currently, India produces a large number of grades of NP / NPK complex fertilizer. These include 16–20–20, 20–20–0, 28–28–0, 15–15–15, 17–17–17, 19–19–19, 10–26–26, 12–32–16, 14–28–14, 14–35–14 and 19–19–19. In addition, India produces various grades of simple and granulated mixtures. Table 6 shows the chronology of fertilizer production in the country.

Table 6
Chronology of fertilizer production in India

The total indigenous capacity of N and P₂O₅ increased from 17 000 and 21 000 tonnes in 1950/51 to 12 276 million and 5 547 million tonnes in 2004/05.

PRODUCTION

The domestic production of N and P₂O₅ was 29 000 and 10 000 tonnes, respectively, in 1951/52. By 1973/74, this had increased to 1.05 million tonnes N and 0.325 million tonnes P₂O₅. As a result of the oil crisis in the mid-1970s and the consequent sharp increase in the international prices of fertilizers, the Government of India encouraged investment in domestic fertilizer production plants in order to reduce dependence on imports. It introduced a “retention price” subsidy in 1975/76. The scheme led to a sharp increase in domestic capacity and production between the mid-1970s and the early 1990s. The total production of N and P₂O₅ rose from 1.51 million and 0.32 million tonnes respectively in 1975/76 to 7.30 million and 2.56 million tonnes in 1991/92. In 1992/93, phosphatic and potassic fertilizers were decontrolled. As a consequence, the rate of growth in the demand for these products slowed. The total production of N reached 10.6 million tonnes and that of P₂O₅ reached 3.6 million tonnes in 2003/04.

There has been a shift in the product pattern over the years. SSP and AS dominated fertilizer production before the 1960s whereas urea and DAP dominate production at present. In 2003/04, urea accounted for 84.6 percent of total N production and di-ammonium phosphate (DAP) accounted for 59.9 percent of total P₂O₅ production (Table 7).

Table 7
Production by product 2003/04

IMPORTS

India imports mainly urea, DAP and potassium chloride (MOP). The country has almost reached self-sufficiency in urea production. As regards DAP, the level of imports was between 1.5 and 2 million tonnes in the 1980s and 1990s. A great deal of DAP capacity came on stream in the early 2000s. Consequently, the importation of DAP fell to less than 1 million tonnes after 2000/01. In 2003/04, DAP imports were 0.73 million tonnes. Imports meet the entire MOP requirement as there are no known natural potash deposits in the country. In 2003/04, MOP imports were 2.58 million tonnes In addition, India also imports a small quantity of mono-ammonium phosphate (MAP) and potassium sulphate (SOP) (65 000 and 10 500 tonnes, respectively, in 2003/04).

CONSUMPTION

Fertilizer consumption was less than 1 million tonnes before the mid-1960s. With the introduction of high-yielding variety (HYV) seeds, there was acceleration in the growth of fertilizer consumption. It reached 12.73 million tonnes in 1991/92 as against 0.78 million tonnes in 1965/66. After the decontrol of P and K fertilizers the growth in consumption slowed. The highest consumption was recorded in 1999/2000 (18.07 million tonnes of nutrients). Since then, the growth in consumption has been erratic. In 2003/04, total nutrient consumption was 16.8 million tonnes. The consumption of N, P₂O₅ and K₂O was 11.08, 4.12 and 1.60 million tones, respectively. Table 8 shows the production, importation and consumption of N, P₂O₅ and K₂O from 1999/2000 to 2003/04.

CONSUMPTION AT STATE LEVEL

The consumption of fertilizers varies significantly from state to state. The all-India per-hectare consumption of total nutrients was 89.8 kg in 2003/04. While the North and South zones have a consumption of more than 100 kg/ha, in the East and West zones the consumption is lower than 80 kg/ha. Among the major states, the per-hectare consumption is more than 100 kg in West Bengal (122 kg), Haryana (167 kg), Punjab (184 kg), Uttar Pradesh and Uttaranchal (127 kg), Andhra Pradesh (138 kg) and Tamil Nadu (112 kg). In the remaining states, the consumption per hectare is lower than the all-India average. Table 9 shows fertilizer consumption per hectare of the gross cropped area in the major states.

Table 8
Production, importation and consumption of fertilizers

NPK CONSUMPTION RATIO

Because the deficiency of N is widespread, the N:P₂O₅:K₂O use ratio has favoured N. This ratio narrowed from 8.9:2.2:1 in 1961/62 to 5.9:2.4:1 in 1991/92. After decontrol of P and K fertilizers in 1992/93, the ratio widened to 9.7:2.9:1 in 1993/94. Despite the introduction of a price concession on P and K fertilizers and other measures taken to increase their consumption, the ratio remained wide and in 1996/97 it was 10:2.9:1 Subsequently it has tended to improve, reaching 6.9:2.6:1 in 2003/04.

Table 9
Consumption of fertilizers by state 2003/04

CONSUMPTION BY PRODUCT

While India uses many types of fertilizers, urea accounts for most of the consumption of N and DAP for most of that of P₂O₅. Urea accounts for 82 percent of the total consumption of straight N fertilizers. Other straight N fertilizers, such AS, CAN and ammonium chloride account for only 2 percent. The share of N through DAP and other complex fertilizers is about 16 percent. DAP accounts for 63 percent of total P₂O₅ consumption and other complex fertilizers for 27 percent. Single superphosphate (SSP) accounts for 10 percent of total P₂O₅ consumption. Figure 4 shows the shares of the various fertilizers in total N and P₂O₅ consumption in 2003/04.

FIGURE 4
Share of fertilizers in total N and P₂O₅ consumption, 2003/04

* NP/NPK complex fertilizers (other than DAP)

@ Includes rock phosphate for direct application