India’s fertiliser import landscape is undergoing a significant transformation, indicating a shift towards a more diversified supplier base. Recent data from the commerce ministry highlights a marked increase in urea imports from various countries, particularly those in Africa. This pivot away from traditional suppliers in the Gulf region is critical for ensuring a stable supply of fertilisers, which is vital for India’s agricultural sector.
Significant Rise in Urea Imports
In the first quarter of the current fiscal year, India imported 2.5 million tonnes of urea, with Egypt, Algeria, Nigeria, and Georgia making up 52% of these imports. Specifically, Egypt contributed 609,000 tonnes, Algeria provided 245,000 tonnes, Nigeria sent 244,000 tonnes, while Georgia accounted for 211,000 tonnes. This marks a substantial increase from the previous year when India did not import urea from these African nations at all.
African Suppliers Strengthen Their Position
The combined shipments from Egypt, Algeria, and Nigeria reached close to 1.1 million tonnes, showcasing Africa’s growing importance in meeting India’s fertiliser needs. This trend underscores the significant role that major African fertiliser producers such as MOPCO and Abu Qir in Egypt, Sorfert and AOA in Algeria, as well as Dangote Fertiliser and Indorama Eleme in Nigeria, play in this growing market. Given India’s existing reliance on its 33 urea plants, which have a collective capacity of 26.9 million tonnes, these imports from Africa represent an increasingly valuable resource.
Geopolitical Factors Driving Change
The diversification of India’s fertiliser sourcing is primarily influenced by geopolitical tensions and disruptions in shipping routes like the Strait of Hormuz, a crucial corridor for the global fertiliser trade. Traditionally, India has depended on the Gulf region for over 40% of its urea and phosphatic fertiliser imports, making it vulnerable to any disruptions. In light of escalating tensions in the Persian Gulf, New Delhi has actively pursued alternative suppliers, not only from Africa but also from several Asian and European markets.
While some Gulf-linked shipments continue to arrive, the challenges posed by the Strait of Hormuz are prompting India to reduce its dependency on a limited range of suppliers. This strategic shift is not just a reaction to current events, but part of a broader effort to secure stable and varied supply chains for essential agricultural inputs.
Increasing Costs and Demand Adjustments
This diversification is coupled with rising fertiliser costs, which have prompted the Indian government to propose an increase in agricultural subsidies from ₹1.77 trillion ($18.6 billion) to ₹3.54 trillion ($37.1 billion). As global prices persist in climbing, market data show that the price of a 45kg bag of fertiliser has surged from ₹2,900 ($30) to ₹4,300 ($45). Consequently, even with a robust domestic production capacity, India still imports about 20% of its annual fertiliser requirements.
In parallel, as monsoon season forecasts have weakened, India has adjusted its fertiliser demand projections for the current kharif season. The overall requirement has been revised downward to 38.39 million tonnes from 39.05 million, with a reduction of about 400,000 tonnes in urea demand. Despite these adjustments, the strong foothold of African suppliers in India’s fertiliser market remains essential, especially as the country strives to mitigate supply risks inherent in its concentrated reliance on Middle Eastern sources.
India’s evolving fertiliser import pattern is crucial for ensuring agricultural sustainability and resilience, highlighting a transition towards a more diversified and secure supply chain.