👉 Why India Must Free the Fertiliser Sector from Excessive Controls

 

It’s Time to Free the Fertiliser Sector from Excessive Controls

For the second year in a row, Indian farmers have been blessed with a good monsoon. Rains have been timely, widespread, and generous, creating the perfect conditions for crop growth. Not surprisingly, farmers across the country have expanded their sowing areas this kharif season, particularly for rice and maize. On paper, this should have been a dream scenario: plenty of water, larger acreages, and the promise of higher yields. Yet, instead of celebration, farmers are facing frustration — because the nutrients their crops need are simply not available in enough quantity.

Water alone cannot ensure good harvests. Fertilisers, especially urea and phosphates, are just as critical for optimal plant growth. But this season, supplies have been severely constrained. On August 1, the stock of urea was reported to be nearly 60% lower compared to the same time last year. In past years, the major shortages were in di-ammonium phosphate (DAP). Now, even urea and complex fertilisers are scarce. Across many states, farmers are queuing up for hours outside retail outlets, only to return empty-handed or with far fewer bags than they need.

Much of the blame has been directed at China. Last year, China accounted for a significant chunk of India’s fertiliser imports — more than 21 lakh tonnes of urea and close to 23 lakh tonnes of DAP. But in the current fiscal, imports from China have collapsed to barely over a lakh tonnes of urea and just about 8 lakh tonnes of DAP, with almost no fresh shipments arriving in recent months. This sudden drop has left a gaping hole in India’s fertiliser supply chain.

But the problem doesn’t end with China. The Indian government itself is also responsible. It seems the authorities underestimated demand this year, particularly for nitrogen-based fertilisers like urea. Rice and maize cultivation — both heavy consumers of nitrogen — is up by nearly 10% and 12% respectively. At the same time, crops like pulses and soyabean, which need very little urea, have seen reduced sowing. The mismatch should have been anticipated, but poor demand assessment has meant that India failed to arrange timely imports from other major suppliers such as West Asia, Russia, Nigeria for urea, or Morocco, Jordan, Egypt, and Tunisia for phosphates.

This complacency has come at the worst possible time. Farmers who should have been celebrating a bountiful monsoon are instead struggling with shortages. The irony is sharp: a good year for rain is turning into a difficult year for inputs. While there is hope that China’s decision to lift some of its export restrictions after a thaw in bilateral relations will improve supplies before the rabi season, the deeper issue remains unresolved.

India’s fertiliser sector is suffocating under excessive government controls — from pricing to imports to distribution. This rigid system leaves little room for flexibility when global markets shift or domestic demand surges. Farmers end up paying the price for bureaucratic missteps. If India is serious about ensuring food security and protecting its farmers, it’s time to rethink and gradually decontrol the fertiliser sector. Allowing greater private participation and more responsive trade policies could prevent such crises from recurring and ensure that a good monsoon actually translates into a good harvest.