India well on its way to self-reliance in fertiliser sector

New Delhi: India has achieved significant milestones in agricultural production and productivity to ensure food and nutrition security to a billion-plus population. The country has achieved foodgrain production of 296 million tonnes (MT) in 2019-20 and is aiming to achieve 300 MT of production during 2020-21. The production of fruits and vegetables has grown at an average of 5 percent per annum during the period 2014-15 to 2019-20. The availability of other nutritional food items like eggs, meat, fish and dairy items, has also witnessed tremendous growth. 

The days of Bengal famines of 1943, which saw 2 million people dying, and the days of international arm-twisting by food-surplus countries for timely supply (export) of foodgrains to India are a thing of the past now. India is now exporting foodgrains to the tune of 2 MT per annum. In 2018-19, the net agricultural exports amounted to Rs 98,200 crore. 

The spectacular success of attaining self-reliance in foodgrain production and nutrition in the country has been achieved through a combination of factors, like the entrepreneurial spirit, hard work and willpower of 140 million farmers, the various farmers' welfare and productivity augmenting policies of the Central and state governments, and the positive role played by other important stakeholders engaged in agri-input, agri-marketing and agri-processing sector. The contribution of timely supply of quality agri-inputs like seeds, pesticides, weedicides, fertilisers (both traditional and manufactured) is quite significant in enhancing production and productivity in the agricultural sector. 

Fertiliser is crucial for ensuring food, nutrition security

Fertilisers constitute 20 percent of the cost of cultivation of various crops, as per an estimation by the Commission for Agricultural Cost and Prices (CACP). Hence, the importance of the fertiliser sector in ensuring food and nutrition security is well recognised. The alternatives to manufactured chemical fertilisers have been tried but there is no proven assurance that these would substantially replace chemical fertilisers. It is neither feasible nor desirable, keeping in view food and nutrition security in countries like India.

The fertiliser sector in India accounts for 0.35 percent of the Gross Domestic Product (GDP). It employs nearly 1,25,000 people in the organised sector and another 3 lakh indirectly. Fertiliser subsidy accounts for 2 percent of the Centre's expenditure and 9 percent of the total Central sector schemes. During 2019-20, the Department of Fertilisers spent Rs 83,466 crore on providing fertiliser subsidy, including market development assistance for production and marketing of City Compost.

The enormity and magnitude of operations of the fertiliser sector can be well imagined from the fact that the daily production of fertilisers is 70,000 Lakh Million Tonnes (LMT). And 65 rake loads of fertilisers are transported to 100-odd destinations daily. The daily sale during peak season is 2 LMT. The number of farmers accessing subsidised fertilisers is 7.16 crore.

The urea sector contributes significantly to fertiliser production and consumption in the country. It accounts for 60 percent of the total fertiliser consumption and 50 percent of the total fertiliser imports in volume terms. The total requirement of urea in the country was 340 LMT during 2019-20, out of which 92.40 LMT was imported as the domestic production capacity is 220 LMT. However, a total of 245 LMT of urea was produced in India during FY2019-20, implying a capacity utilisation of 113.60 percent. 

Self-reliance in urea production by 2023-24

The government is determined to attain self-reliance in urea production by 2023-24. Towards achieving this objective, a series of policy initiatives and facilitation measures have been initiated since 2014-15. The New Investment Policy for the fertiliser sector, as modified in 2014, aims to incentivise production beyond rated capacity and to encourage attainment of better energy norms, in addition to assuring buyback of urea at a cost that provides an adequate post-tax return on equity for a defined number of years. This has attracted private investment in the sector and two units have come up — one at Gadepan, Rajasthan, by Chambal Fertilisers and Chemicals Ltd (CFCL) and another at Panagarh near Durgapur, West Bengal, by Matix Fertilisers and Chemicals Ltd (MFCL). 

Further, as part of securing significant domestic production, the government has also taken the bold decision of establishing brownfield urea manufacturing units through joint ventures (JV) formed by several Navaratna and Miniratna Public Sector Undertakings (PSUs). 

The first such JV is Ramagundam Fertiliser and Chemical Ltd (RFCL), owned jointly by Rashtriya Chemicals and Fertilisers Ltd (RCF), Engineers India Ltd (EIL), National Fertilisers Ltd (NFL) and FCIL. The plant is going to be commissioned in the next two months, with an annual production capacity of 12.7 lakh MT of urea. The RFCL plant is located in the Karimnagar district of Telangana and the project cost is Rs 6,165 crore. 

The government of India has also facilitated the formation of another JV company —  Hindustan Urvarak & Rasayan Limited (HURL) — with Coal India Ltd (CIL), NTPC, and Oil India Ltd (OIL) as major shareholders and HFCL and FICL as minority shareholders. It is executing three brownfield urea manufacturing units at Gorakhpur in UP, Barauni in Bihar and Sindri in Jharkhand. The estimated project cost of these three plants is Rs 7,085 crore, Rs 7,043 crore, and Rs 6,977 crore, respectively. Presently, the mechanical erection of the various plants is in full swing, notwithstanding the outbreak of the COVID-19 pandemic. It is expected that the Gorakhpur plant will be commissioned by December 2021, and the other two units by January 2022. 

Self-sufficiency should come along with energy efficiency

The Department of Fertilisers has initiated measures to improve the energy efficiency norms of urea plants to bring them at par with the best in the world. In this regard, the Department has facilitated the existing fertiliser CPSEs by extending capital grants and has allowed conversion of feedstock from inefficient and costly furnace oil and naphtha to natural gas. Except for MFCL and Southern Petrochemical Industries Corporation (SPIC), all the other urea units have converted to natural gas. It is expected that the 365-km-long pipeline being laid by GAIL through Jharkhand and West Bengal would be completed by December 2020. Similarly, GAIL India Ltd and OIL are laying down natural gas pipelines for the fertilizer units of MFCL and SPIC, respectively. With the completion of these pipelines, all urea manufacturing units in the country will have uniform feedstock of natural gas.

However, India is not endowed with a sufficient quantity of natural gas and it imports nearly 80 percent of the domestic requirements. To move towards self-reliance in securing energy sources, the government is also trying to find alternative energy sources like coal gasification for the large energy-consuming fertiliser and power sector since India has significant coal reserves. 

India's first coal gasification fertiliser plant

The first fertiliser plant based on syngas through coal gasification in India was established at Talcher in Odisha in the 1970s, which ran for nearly 20 years. But due to various factors, this plant could not sustain commercial production for long. However, it did demonstrate the technological feasibility of coal gasification for the production of syngas. Now, the Centre has decided to revive Talcher Fertiliser Limited (TFL) as a joint venture entity with RCF, GAIL, CIL and FICL as promoters. The actual construction of the plants will start shortly. It is expected that urea production will start towards the end of 2023.

With the above five plants in the JV sector and the completion of gas connectivity to Matix plant near Durgapur, the production capacity of urea in the country will go up by 76.2 LMT, taking the total installed capacity to 296 LMT per annum by the end of 2023. With 115 percent capacity utilisation, as the norm is in the urea sector, the total production can reach 340 LMT per annum, which is equal to the consumption level achieved in 2019-20. With efforts to promote organic, nano, bio and other traditional fertilisers like bio-composts and city composts, it is expected that urea consumption will stabilise in the range of 335-340 LMT per annum. And our domestic production will be able to cater to this demand. This will be a significant achievement towards Aatmanirbhar Bharat, and will simultaneously promote Make in India in the fertiliser sector.

Roul is currently serving as Secretary in the Department of Fertilisers, Ministry of Chemicals & Fertilisers.

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