Fertiliser Chemical Industry | Economics Dissertations

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10.13 Fertiliser

Fertiliser, a crucial input to the agricultural sector, forms the backbone of the Indian economy. Fertilisers can be classified into chemical fertilisers and organic fertilizers, of which chemical fertilisers are more prominently used in India. These have played a significant role in India’s agricultural success story, by not only fulfilling the total food grains requirements, but also creating an exportable surplus.

Chemical fertilisers played a crucial role in the success of India’s green revolution and consequent self-reliance in food-grain production, which in turn gave an impetus to the growth of this sector. Presently India is the third largest producer of fertiliser in the world. The fertiliser industry is also one of the most energy intensive sectors within the Indian economy apart from aluminum, cement, iron & steel, glass and paper, as it requires various fuels like natural gas, fuel oil and naphtha, as raw materials for production.

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Industry Size and structure

The Indian Fertiliser Industry, under the purview of the Ministry of Chemicals & Fertilisers can be segmented on the basis of the various nutrients.

  • Union Ministry of Chemicals and Fertilisers (Department of Fertilisers)
  • Structure of the Indian Fertiliser Industry
  • Potash (K) (Mainly imported)
  • Phosphate (P)
  • Public
  • Private
  • Co-operatives
  • Nitrogen (N)
  • Public
  • Private
  • Co-operatives

According to the data released by the Department of Fertilisers, the total installed capacity of the Nitrogen segment in India stands at 12.06 mn MT (million metric tonnes), of which, the public sector accounts for 29%, while private and co-operative sectors account for 26.27% and 44.73%, respectively.

The capacity in the phosphate segment is 5.7 mn MT with the share of public sector being 7.65%, while that of private sector is 30.27% and co-operatives accounts for 62.08%. There being no viable resources or reserves of potash in the country, the entire requirement is entirely imported. In addition to these segments, there are the complex fertilisers produced by combining various nutrients such as nitrogen, phosphate and potash in different proportions.

While urea, ammonium sulphate, calcium ammonium nitrate (CAN) and ammonium chloride are the nitrogenous fertilisers produced in the country; the only phosphatic fertiliser being produced is SSP (single superphosphate). Production of complex fertilisers include DAP (Diammonium Phosphate), several grades of nitrophosphates and NPK complexes. Of these, urea and DAP are the main fertilisers produced indigenously.

Demand & Supply – side factors

Fertiliser consumption mainly depends on various agriculture related factors such as soil quality, farming methods, rainfall and irrigation patterns, different geographical aspects, calamities, availability of technology and information, varieties and qualities of seeds as well as access to capital and credit and other inputs.

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