LONDON (ICIS)--India is to stop urea imports by March 2021, down from current levels of 6m tonnes/year, as new domestic manufacturing capacity comes on stream, according to a report by India Ratings and Research (Ind-Ra) on Tuesday.
The new urea capacity of around 6.35m tonnes is due to come on stream under the New Investment Policy (NIP) set out in 2012.
“Under the NIP 2012, the returns for the new plants are likely to be strong provided the subsidy is received in a time-bound fashion and the offtake is greater than 85%,” said the report.
Ind-Ra is a subsidiary of US credit rating agency Fitch.
The five urea plants that are to be revived are based in Talcher, Ramagundam, Gorakhpur, Sindri and Barauni, and have a capacity of around 1.27m tonnes/year each.
The government has previously said it plans to invest $8.7bn to revive mothballed fertilizers plants and construct gas pipelines to become self-sufficient in urea by 2021, with some surplus available for export too.
As for phosphates, Inda-Ra expects lower direct imports of diammonium phosphate (DAP) but higher imports of rock phosphate (phosrock) or phosphoric acid (phosacid) as more conversion facilities are set up in the country.
DAP is produced either from phosrock or phosacid domestically or is imported directly.
Indian DAP imports stood at around 4.3m tonnes
in the previous fiscal year.
Most of the phosrock and phosacid is imported into the country, as India has limited resources with the only major producer being in Rajasthan (Rajasthan State Mines and Minerals Limited).
DAP manufacturers are looking at increasing the use of phosrock as it allows higher margins on DAP sales due to benefits of backward integration, according to Ind-Ra.
Fertilizer companies are increasing focus on customised nitrogen phosphorous and potassium (NKP) fertilizers to address specific climatic needs of farmers, said Ind-Ra.
The report also said India is expected to keep importing 100% of its potash requirements, as it does not have domestic reserves of muriate of potash (MOP).
India imported 4.7m tonnes of MOP in the previous fiscal year.
Indian farmers rely heavily on nitrogen fertilizers such as urea, compared to potash, since urea is subsidised by the government and therefore less pricey.
The ideal nitrogen to potash ratio suggested for Indian soil is 4:1. However, the actual ratio varies between 6:1 to :7:1, according to Ind-Ra.
“Going forward, there is a possibility of increase in consumption of MOP and other NPK fertilisers which could result in a gradual movement towards the ideal nitrogen to potash ratio,” said the report.
Ind-Ra said this shift would be driven by greater focus by the government and fertilizers companies to offer soil health cards leading to informed decision making by the farmers and an increase in farm productivity.
Pictured: A farmer in eastern