FERTILIZER INDUSTRY



Published on 18 Feb 2025

India is a major global player in the fertilizer industry, ranking second in urea consumption and production of nitrogenous fertilizers. As a core industry heavily subsidized by the government, it plays a vital role in agriculture. 

Locational factors of Fertilizer Industry

  • Raw Materials: Most of the industries are raw material oriented i.e. located where raw material is available.

    • Naphtha: King of the raw materials, this petroleum byproduct fuels over 70% of production. Fertilizer plants huddle near oil refineries for easy access to imported Naphtha 

    • Coal Power: A dual role - coal provides both fuel and a key ingredient for ammonia production. Plants like those in Ramagundam and Korba are prime examples.

    • Steel Plant partners: Fertilizer plants can benefit from the byproducts of iron and steel production. Plants near steel plants in Bhilai, Durgapur, Jamshedpur, etc., utilize Coke Oven Gas 

    • Rock Phosphate Reliance: While most rock phosphate is imported, some domestic deposits exist in Jharkhand, Andhra Pradesh, and Rajasthan. 

    • Sulphur Scarcity: Limited domestic reserves of Sulphur necessitate import reliance. Locations with good import access are preferred.

  • Energy Efficiency: The fertilizer industry needs energy, Plants are strategically located near readily available and affordable energy sources.

    • Example:  Nangal Plant located near Bhakra Nangal Dam

  • Location Lifeline: Efficient transportation networks are crucial for this industry. Bulky raw materials need to be brought in, and finished fertilizers need to reach consumers 

  • Capital Considerations:  Setting up a fertilizer plant requires significant capital. Locations with strong financial backing, like the Gujarat-Maharashtra region, are often favoured.

  •  Favourable Government: Government policies significantly influence location decisions.

    • Example: The Sindri fertilizer plant is a prime example of a plant established based on government policy.

Distribution of Fertilizer industry

Important facts regarding Fertilizer Industry

  • India is the 2nd largest consumer of Urea fertilizers after China. 

  • India also ranks 2nd in the production of nitrogenous fertilizers and 3rd in phosphatic fertilizers. 

  • Potash requirement is met through imports since we have limited reserves of potash.

  • India is still not self-reliant in fertilizer production (about 50% of fertilizers are imported).

  • India meets 85 percent its urea requirement through indigenous production but depends heavily on imports for its phosphate and potash (P & K) fertilizer requirements.

india map fertilizers

Fertilizer industry in India is concentrated in certain major regions of the country. This industry is mainly spread over 5 regions.

5 Regions

Important Centres

Gujrat region

Vadodara, Kalol, Ahmedabad, Kandla and Trombay

Chottanagpur region

Jamshedpur, Rourkela, Durgapur, Burnpur, Sindri, Bhilai, etc

Tamil Nadu region

Coimbatore, Neyveli, Alwaye (Kerala), Kochi (Kerala), Tuticorin, Ennore.

North west region

Bhatinda, Nangal (Punjab), Panipat (Haryana) and Delhi.

Uttar Pradesh region

Jagdishpur, Gorakhpur, Aonla, Shahjahanpur, Babrala etc.


Challenges faced by the Fertilizer Industry 

  • Raw Material Woes: Fluctuating prices and limited domestic availability of key ingredients like natural gas (urea) strain the industry.

    • Example: The prices of key raw materials, such as phosphate rock and potash, are volatile due to factors like geopolitical tensions and global demand-supply imbalances.

  • Subsidy Squeeze: Government efforts to reduce fertilizer subsidies (WTO agreements) can hinder industry growth.

    • Example: India has been under pressure from the World Trade Organization (WTO) to reduce fertilizer subsidies which pressurizes the government.

  • Low Demand: Limited irrigation infrastructure leads to lower fertilizer consumption and restricts industry expansion.

    • Example: Excessive application of urea has led to soil degradation, environmental pollution, and diminishing returns to investment.

  • Outdated Technology: Dependence on aging technology in Public Sector Undertakings (PSUs) leads to inefficiencies and losses.

Prospects of Fertilizer Industry

  • Growing Population & Food Demand: India's rising population necessitates increased food production, driving demand for fertilizers.

  • Shifting Food Preferences: Changing dietary patterns towards a wider variety of food grains with improved qualities will further increase fertilizer use.

  • Enhanced Farmer Awareness: Improved education, literacy, and digital communication are boosting fertilizer awareness among farmers, especially in areas with traditionally low usage.

  • Neem-Coated Urea: A Game Changer

  • Innovation: Neem oil coating on urea slows nitrogen release (10-15%), potentially reducing fertilizer usage and improving efficiency.

  • Government Push: Since 2015, mandatory production of 100% neem-coated urea in India promotes this technology.

Tags:
Geography

Keywords:
FERTILIZER INDUSTRY Locational factors of Fertilizer Industry Distribution of Fertilizer industry Important facts regarding Fertilizer Industry Challenges faced by the Fertilizer Industry Prospects of Fertilizer Industry

Syllabus:
General Studies Paper 1

Topics:
Resources Distribution

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