India’s heavy reliance on imports from the Gulf region for key fertilizer inputs such as liquefied natural gas (LNG), ammonia, sulphur, and finished products like urea and diammonium phosphate (DAP) has raised concerns over the country’s fertilizer security. Experts emphasize the need for a comprehensive, long-term strategy to reduce dependency and enhance self-sufficiency beyond short-term measures.

Nitrogen fertilizer demand in India is predominantly met through urea, which accounts for over 80 percent of nitrogen application. However, the sector faces a widening supply gap due to a combination of rising demand and declining domestic production. The shortfall is expected to grow from 4.4 million tonnes in 2023-24 to nearly 10 million tonnes by 2025-26. Correspondingly, urea imports are projected to nearly double, reaching around 10 million tonnes in 2025-26 compared to 5.6 million tonnes in the previous year, representing an increase of approximately 80 percent.

Natural gas, crucial for urea manufacturing, is largely sourced through imports, with about 85 percent of domestic gas requirements met by imported LNG. To mitigate supply disruptions, industry stakeholders are advocating for urea production units to be allowed to utilize mixed feedstocks, such as a combination of gas and naphtha, an option feasible in the early 2000s but phased out with the availability of cheaper imported gas post-2005. Additionally, coal usage for utilities within urea plants is recommended to continue, as it remains a cost-effective alternative to gas for steam and power generation, provided that plants receive adequate reimbursement based on realistic energy consumption benchmarks.

Another key recommendation involves incentivizing modernization of aging fertilizer plants to enhance efficiency and output. Simultaneously, there is a push to explore the viability of producing “green urea” derived from green ammonia, which would eliminate reliance on LNG. Recent agreements between green ammonia producers and fertilizer manufacturers have been signed for about 724,000 tonnes of green ammonia, signaling progress in reducing imports of conventional ammonia used for non-urea fertilizers. However, technical and economic challenges remain in integrating green ammonia into urea production. Industry observers suggest that pilot demonstration plants be established to identify and address technological and logistical gaps before scaling up full production. Realistically, green ammonia could account for 20-25 percent of nitrogenous fertilizer production within the next five years.

Diversifying nitrogen sources is another avenue for reducing urea dependence. Expanding the use of NP (nitrogen-phosphorus) and NPK (nitrogen-phosphorus-potassium) complex fertilizers, which currently make up about 18 percent of nitrogen application, is recommended. These products not only facilitate balanced fertilization but can also potentially be manufactured entirely from green ammonia.

Ammonium sulphate (AS), containing 20.5 percent nitrogen and 23 percent sulphur, stands out as a particularly promising nitrogen source suited for sulphur-deficient soils and oilseed crops. While capable of being produced from green ammonia and domestic sulphur, AS usage in India remains under one million tonnes, hampered largely by subsidy policies. The nutrient-based subsidy (NBS) scheme imposes a price cap on AS subsidies, which results in significantly lower support—about one-third of its production cost—compared to the 85 to 90 percent subsidy typical for urea. This disparity drives the retail price of AS to more than four times that of urea on a per-kilogram nitrogen basis, limiting its adoption.

Improving nitrogen use efficiency (NUE) is also highlighted as critical in addressing fertilizer security. Techniques such as site-specific integrated nutrient management, incorporation of organic fertilizers, and soil amendments like bio-char could enhance NUE by an estimated 10 percentage points.

Overall, experts advocate for recalibrating subsidy structures to create a level playing field among fertilizer products, fostering the modernization of existing urea plants, and accelerating the shift toward green fertilizer production to strengthen India’s fertilizer supply resilience.