Fertiliser demand may grow by 3% in next 2 years: Report

Fertiliser demand, which is closely linked to the core production of agriculture value chain, is likely to witness 3 per cent annual growth in the next couple of years, according to a report.

The Indian agriculture industry is expected to face pressure from an increasing population base and the dire need to increase the productivity and efficiency across all stages of agriculture value chain, from preparing arable land to cultivation to storage and transport of agriculture produce, according to "Industry Wrap" by State Bank of India's Economic Research department.

The report said fertiliser usage, which is closely linked to the core production part of agriculture value chain, would thus witness higher demand and in light of these favourable scenarios, the demand is expected to rise by an average rate of 3 per cent per annum in the next couple of years.
 

Indian fertiliser industry is the third largest in the world in terms of production and second largest in terms of consumption, it said.

Domestic production is well below demand, forcing the country to import fertiliser to meet the demand supply gap, said the report.

During the previous fiscal, fertiliser demand in India was pegged at around 66 million tonnes with production level around 37 million tonnes.

In the past one decade, fertiliser production grew by a low rate of 1.63 per cent while imports grew annually by 9 per cent.

China, Oman and Iran are the major exporters of urea to India with China constituting above 50 per cent of the country's total urea import.

China increased its export of urea to India to 4.239 million tonnes in FY16 from 0.155 million tonnes a decade ago, the report said.

Further, it said, agriculture sector has always remained a focus area for the government and will continue to remain so in the coming years.

In the Budget, the government has laid out its plan to double farmers income in five years and to meet this goal, agriculture spending is likely to substantially go up, which will benefit all ancillary sectors including fertilisers, said the report.

Additionally, it said, options for setting up of joint venture for urea production in Gulf countries can be evaluated, where gas is available at much lower price compared to the pooled gas prices for urea plants in India.