India’s urea production has seen significant growth in recent years, despite the challenges faced by the fertilizer sector.

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India’s urea production has seen significant growth in recent years, despite the challenges faced by the fertilizer sector. Driven by the government's push for self-reliance, or atmanirbharta, substantial investments have been made in domestic urea manufacturing.

Recent Growth In Urea Production

From 2011-12 to 2023-24, India’s domestic urea output rose from 22 million tonnes to 31.4 million tonnes. Meanwhile, imports have decreased slightly, dropping from 7.8 million tonnes to 7 million tonnes during the same period. The current fiscal year has witnessed a notable 31.7% decline in imports, with the figure potentially falling below 5 million tonnes for the first time since 2006-07.

Expansion Of Urea Plants And Investments

The increase in production is largely attributed to the commissioning of six new urea plants by major companies like Hindustan Urvarak & Rasayan Ltd (HURL), Chambal Fertilisers, Matix Fertilisers, and Ramagundam Fertilizers. These projects, with an investment range of Rs 6,000-8,600 crore each, are expected to produce a combined 7.55 million tonnes of urea by 2023-24. The new plants are designed to be energy-efficient, requiring only about 5 giga-calories per tonne of urea.

Location And Capacity Of New Plants

The new plants are strategically placed in eastern India, with locations in Uttar Pradesh, West Bengal, Bihar, Jharkhand, and Telangana, expanding the production base beyond the traditional hubs of Punjab and Haryana. For example, Matix Fertilisers now commands a 20% market share in Eastern India and is the exclusive urea producer in West Bengal.

Innovations And Upcoming Projects

A seventh plant is currently under construction in Talcher, Odisha, at a projected cost of Rupees 17,080.69 crore. This facility will utilize coal as its feedstock, marking a departure from the traditional natural gas-based production method. The plant, which is about two-thirds complete, employs an innovative coal gasification technology to enhance efficiency.

Economic Considerations: Domestic Production Vs. Imports

The total investment in these new plants stands at Rupees 61,575 crore. Despite the rise in domestic production, importing urea remains more cost-effective. Urea imports are priced between $370 and $403 per tonne, while domestic production costs are higher, around $493 per tonne. However, with tax exemptions factored in, the cost of domestic production could decrease to about $427 per tonne, making it more competitive.

Trends In Urea Consumption And Need For Sustainable Practices

India's urea consumption has steadily increased from 29.6 million tonnes in 2011-12 to 35.8 million tonnes in 2023-24. However, the price of urea has remained unchanged since 2012, leading to unsustainable consumption patterns. Adjusting the pricing strategy could help curb excessive consumption, alleviating pressure on both domestic production and imports.

Future Of Urea Production In India

Recent infrastructure developments, including LNG terminals and expanded pipeline networks, are reshaping the economics of urea production. These advancements allow for a more regionally focused approach, with northern and eastern parts of the country emphasizing domestic production, while southern regions may rely more on imports. In the long run, promoting more sustainable practices in both the consumption and production of urea will be critical for the stability and sustainability of India’s agricultural sector.

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