India secures fertiliser supplies from Russia

Updated on May 30, 2022 04:54 AM IST
To hedge against geopolitical flux and globally high prices, India opened government-to-government talks in February with Russia for the long-term import of fertilisers.
Russia will supply crop nutrients via a barter system avoiding dollar transactions due to US sanctions, as Russian importers will exchange fertilisers for various Indian commodities, including tea, raw materials and auto parts. (Representative use)
Russia will supply crop nutrients via a barter system avoiding dollar transactions due to US sanctions, as Russian importers will exchange fertilisers for various Indian commodities, including tea, raw materials and auto parts. (Representative use)
By, New Delhi

India has finalised critical supply of fertilisers from Russia under a barter agreement, as talks concluded on a multi-year import deal, according to multiple officials.

India imports most of its fertilisers, which is crucial because nearly half the population depends on a farm-derived income and the Black Sea conflict trimmed its fertiliser balance ahead of the crucial summer-sown June-September kharif season. Agriculture accounts for 15% of India’s $2.7-trillion economy.

To hedge against geopolitical flux and globally high prices, India opened government-to-government talks in February with Russia for the long-term import of fertilisers.

Russia will supply crop nutrients via a barter system avoiding dollar transactions due to US sanctions, as Russian importers will exchange fertilisers for various Indian commodities, including tea, raw materials and auto parts.

Velina Tchakarova, the director of Austrian foreign policy think tank AIES, tweeted: “India is 2nd largest importer aiming for 1 million tonnes of di-ammonium phosphate (DAP) and potash; and about 800,000 tonnes of nitrogen, phosphorus, potassium (NPK) from Russia every year.”

An official said India had “legitimate national interests” and to fulfil them the India side had initiated talks for multi-year import for fertilisers for the first time in decades.

Russian importers will import fresh farm produce, medical devices, auto parts and other key commodities from India under the barter, a second official said.

Amid a surge in global prices of fertilisers due to the Ukraine war, the Modi government on May 21 said the government would provide additional fertiliser subsidy of 1.10 lakh crore to cushion farmers from prices.

The additional allocation has doubled the government’s total fertiliser subsidy bill to a record 2.15 lakh crore in the current fiscal (2022-23).

“Despite rising fertiliser prices globally, we have protected our farmers from such price hikes. In addition to the fertiliser subsidy of 1.05 lakh crore in the budget, an additional amount of 1.10 lakh crore is being provided to further cushion our farmers,” finance minister Nirmala Sitharaman had tweeted.

According to the second official cited above, National Fertilizers Ltd, Madras Fertilizers Ltd, Rashtriya Chemicals and Fertilizers Ltd, India Potash Ltd and Fertilisers and Chemicals Travancore are expected to sign a three-year deal for DAP, potash and complex fertilisers with Russian companies such as Phosagro and Uralkali.

India is looking to shore up domestic supplies of fertilisers after a shortage in 2021 created panic among farmers and continued global instability.

In March, a Jordanian delegation led by its minister of investment Kheiry Yaser Abdel-Monim Amr held talks with Union minister for chemicals and fertilisers Mansukh Mandaviy for supply of phosphatic and potassic fertilisers and raw materials from Jordan to India.

Mandaviya visited Jordan from May 13 to 15, 2022 to secure fertilisers and raw materials. India signed an agreement with Jordan for supply of 3 million tonne of rock phosphate, 0.25 million tonne of DAP, 0.1 million tonne of phosphoric acid for the current year.

“A long-term memorandum of understanding was signed with Jordan for annual supplies of 2.7 million tonne of MoP and this will uniformly increase annually up to 3.2 million tonne,” according to an official statement.

Prices of fertilisers in the country have nearly doubled due to a global shortage and supply disruptions caused by Russia’s invasion of Ukraine, prompting the government to announce a mid-term hike in subsidy.

Russia accounts for nearly 13% of global fertiliser production and is a key supplier to India. Russia temporarily banned fertiliser exports in March, driving up already high fertiliser prices.

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  • ABOUT THE AUTHOR

    Zia Haq reports on public policy, economy and agriculture. Particularly interested in development economics and growth theories.

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