India set to sign deals to secure fertiliser imports
Indian fertiliser and chemical companies have also accelerated investments in several mineral rich North African nations so as to hedge against price spirals and volatility.
India is on the verge of signing long-term deals with several countries to secure fertilizer imports, critical for food security amid increasing geopolitical uncertainties , a government official said, requesting anonymity.
Union chemicals and fertilisers minister Mansukh Mandaviya is set to travel to Morocco this month to finalise a memorandum of understanding between the two countries for supply of critical raw materials at steady prices, a senior official has said.
Indian fertiliser and chemical companies have also accelerated investments in several mineral rich North African nations so as to hedge against price spirals and volatility.
A visit by the Union minister to seal a deal with Egypt is also on the cards and more agreements are expected with Senegal, Israel, Oman, Canada, Saudi Arabia and Jordan, the official added, asking not to be named.
India relies on imports to meet a third of its annual domestic demand of crop nutrients, which it gives at a discount to farmers. In 2022, prices rocketed before falling amid the Ukraine war and due to the knock-on effects of the pandemic. The country’s annual fertiliser subsidy is set touch a record ₹2.15 lakh crore during 2022-23.
India will sign long-term pacts with Morocco and Egypt for the supply of rock phosphate, a raw material for making diammonium phosphate (DAP) and nitrogen-phosphorus-potassium (NPK).
India is moving towards self-sufficiency in urea, the official said, while the country is preparing to diversify away from countries such as China and Russia to source non-urea DAP fertilisers, whose supplies have dwindled.
“These measures will help make the country atma nirbhar (self-reliant) in fertilisers. The goals are to diversify sources of supply, have long-term contracts and get price discounts,” the official said.
The Ukraine war, costlier fertilisers and drought in Europe, China and the US have aggravated a global food crisis, which will “drive millions more into extreme poverty”, the World Bank said in a recent update.
Indian firms are also clinching deals with fertilizer and mining companies abroad with the help of government-to-government consultations.
On August 25, 2022, Mandaviya was in Saudi Arabia to chaperone bilateral pacts between several Indian firms and cooperatives with the Saudi Arabian Mining Company (Ma’aden). The deals will ensure 2.5 million tonnes of fertilizer supply through a three-year contract.
The pacts also included those with the state-owned Indian Potash Company for supply of phosphate products; Gujarat State Fertilisers and Chemicals for supply of ammonia; and with Krishak Bharati Cooperative Company and Coromandel International for supply of phosphate products and ammonia.
“Addressing the Bali summit last year, Prime Minister Modi had warned that a fertiliser crisis could quickly escalate into a food crisis. India’s strategy for alternative suppliers and multi-year import contracts is to pre-empt price volatility, which raises the fertiliser subsidy bill, and to ensure there is no domestic crisis,” said Gajendra Mahajan, an analyst with Comtrade, a commodity trading firm.
