In a positive development, India’s urea industry is now making significant progress towards achieving self-sufficiency.
According to a report by Crisil Ratings, the country’s dependence on urea imports is expected to decline to 10-15% in the near to medium term, down from 30% in the financial year 2020-21.
This reduction is anticipated to be driven primarily by the introduction and stabilization of new production capacities.
It further notes, that these new facilities are projected to achieve steady, regulated returns as their utilization rates improve.
These increased capacity utilization is expected to enhance the operating efficiency and profitability of new plants. Additionally, sufficient subsidy allocations are likely to keep the credit profiles of urea industry companies stable.
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Meanwhile, between fiscal years 2007 and 2012, urea demand growth surpassed production. As a result, it led to an increase in import shares to 20-25% of total consumption.
According to Crisil director Anand Kulkarni, New Investment Policy (NIP) of 2012 has been instrumental in structurally reducing import dependency.
Further, these new plants are projected to operate at full capacity this fiscal year, up from 85-90% in the previous year, with the potential addition of another plant boosting domestic production further.
In future, a rise in the adoption of nano urea could further accelerate India’s path to self-sufficiency. But, as per official data from the Department of Fertilizers, India imported 70.42 lakh tonnes of urea in the fiscal year of 2023-24. As a result, it costed USD 2.608 billion. Thus, reflecting that reduction in urea import dependency still remains critical.
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(With Inputs From ANI)
