The Indian government recently told the parliament it would continue to make the country self-sufficient in urea as quickly as possible.
Currently, Indian urea production stands at about 24.1 million mt/y. With demand at 30.5 million mt/y, the balance is made up with imports from the joint venture operation in Oman, and from tenders, such as the recently closed one by MMTC.
This year India is expected to import about 7 million mt of urea. The cost of subsidizing the imported urea is a major drain on the Indian treasury. Farmers pay just under $78/mt. The difference between the imported price – currently $292-$295/mt CFR, based on the most recent tender – and the price paid by the farmers is the subsidy offered by the government. Previous attempts to raise the urea price or to reduce subsidies has met with fierce opposition from farmers and their representatives in government.
To reduce the cost of subsidizing urea, the government has encouraged farmers to use less and to reduce the country’s dependency on imported urea.
In a written statement to the parliament, Minister for Chemicals and Fertilizers Shri D.V. Sadananda Gowda said more domestic production is on its way. He said new capacity of 3.14 million mt/year has been added since 2017, with three more plants soon to be online, covering another 1.3 million mt.
Gowda also said five older plants are being upgraded and restarted to add another 6.3 million mt to the country’s production (GM June 21, p. 26), reiterating an announcement he made earlier. The last of those revamps is slated to be up in September 2023.
Once all these plants are online, Gowda said, India’s urea needs will be covered by Indian production, with only a few tons coming in from offshore joint ventures.
“India is currently the world’s largest urea importer, a role they earned after the U.S. doubled its urea capacity and stepped back from the import market,” said Green Markets Research Director Alexis Maxwell. “Global urea prices rise when India tenders and fall when India is out of the market. When India increases its domestic production in the [next] 2-5 years, the world will lose a major demand center which supports the market with frequent, large purchases, and there’s no candidate to take their place on the global stage except perhaps Brazil.”