India’s urea import has dropped 17 per cent in 2022-23 fiscal, the second time in a row, thanks to increase in its domestic output and launch of nano-urea. However, a 30 per cent rise in import of Di-ammonium Phosphate (DAP) calls for further policy action as the overall fertilizer subsidy jumped 66 per cent to ₹2,54,800.05 crore last year.

Urea imports down

According to latest official data, import of urea declined to 75.77 lakh tonne (lt) in last fiscal from 91.36 lt in 2021-22, that of Muriate of Potash (MoP) to 13.93 lt from 17.68 lt (-21 per cent). However, DAP import has surged to 70.83 lt from 54.62 lt and complex (combination of N, P and K) varieties to 27.52 lt from 11.7 lt (135.2 per cent). “There was an increase in domestic production of urea, particularly after revival of plants such as Ramagundam. It is natural to see its impact on import,” said Arvind Chaudhary, Director General of the Fertilizer Association of India.

Urea production in last fiscal jumped 13.6 per cent to 284.94 lt from 250.72 lt in 2021-22. Domestic production of DAP (mainly through imported raw materials), which has a share of 38 per cent in its total annual availability, jumped 3 per cent to 43.47 lt from 42.22 lt. In case of MoP, India imports the entire requirement. In 2021-22 also, there was drop in import of urea and MoP, while the overseas purchase of DAP increased by almost 12 per cent.

Different usage

On higher import of DAP, Chaudhary said both urea and DAP have different usage and should not be compared. There are several factors responsible in import, like cost effectiveness of imported material. When global prices of rock phosphate increased the entire subsidy benefit was not passed on to Single Super Phosphate (SSP), which became slightly costlier than DAP.

Import and consumption of urea largely depends on availability as it is completely controlled by the government. In case of potash and phosphorous, the selling price of these two fertilizers determine the consumption. The current MRP of DAP is ₹1,350/bag whereas that of MoP is ₹1,742/bag of 50 kg.

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The combined subsidy on phosphorus (P) and potash (K) was ₹86,122.23 crore in 2022-23, out of which the maximum amount was used for phosphorus to keep prices of DAP under check. Chaudhary said global price of DAP which reached as high as about $950/tonne last year has come down to $515-520/tonne now. Urea has also declined to $330/tonne (from $ 722 in May 2022) and MoP dipped to $422/tonne (from $ 590/tonne in March 2023).

The Fertilizer Ministry has estimated the subsidy in current fiscal to be lower than ₹1 lakh crore against Budget allocation of ₹1.75 lakh crore.

According to the ministry, fertilizer consumption in the country increased 1.6 per cent to 585.43 lt in 2022-23 from 576.09 lt in its previous year. Out of this, urea sales are up 5.3 per cent to 356.75 lt and DAP by 14.1 per cent to 105.19 lt. However, consumption of MoP dipped 33.4 per cent to 16.28 lt and that of complex by 11.3 per cent to 107.21 lt.

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