The government allocation for urea imports in 2017-18 could match the funds it borrowed (Rs 14,251 crore or $2.2 billion) from Japan in 2016-17 for infrastructure projects.

Nitrogen-based urea dominates fertiliser consumption in India as it is subsidised compared to phosphorous and potassium fertilisers, prices of which are not regulated. Urea accounted for 40% of all major fertilisers consumed in India in 2015-16, data from the department of agriculture show.

India’s urea imports in 2017-18 are estimated to remain unchanged at 5.5 million tonne compared to last year, according to this reply to the Lok Sabha (lower house of Parliament) by chemicals and fertilisers minister Ananth Kumar on July 18, 2017. The government has allocated Rs 14,000 crore for the imports, the minister said.

India’s urea imports fell 32% in five years to 2016-17 to 5.5 tonne from eight tonne in 2012-13, fertiliser ministry data show even as India plans to end imports by 2022 by reviving old units, Bloomberg reported on April 17, 2017.

Source: Department Of Fertilizers, Ministry of Chemicals & Fertilizers

The urea subsidy bill for 2017-18 at Rs 70,000 crore is 21% of India’s three major subsidies (food, fertilisers and petroleum) and 71% of the fertiliser subsidy, according to the 2017 budget. The three major subsidies account for 88% of the total subsidy in 2017-18.

The government is now packaging urea in 45-kg bags instead of 50-kg ones to reduce consumption, the minister said in his reply.

India could produce 80% of its needs in 2016-17, according to the ministry’s annual report for the year.

India was the world’s second largest consumer of urea with 22% of world consumption, after China’s 36%, in 2014, the latest year for which global data are available, according to the International Fertilizer Association, a non-profit representing the global fertiliser industry.

Source: International Fertilizer Association

(Vivek is an analyst with IndiaSpend.)

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