Domestic DAP makers take a lesser hit than importers amid price surge

Price of raw materials used by local players has not spiked

Even as the price of imported finished Di-Ammonia Phosphate (DAP) is shooting through the roof due to China’s export restriction and supply disruption, domestic manufactures of DAP are likely to take a lesser hit as the price of raw materials that goes into making the crucial plant nutrient has not risen by same proportion. 

This has also reignited calls for promoting domestic value-addition than encouraging imports which would also boost capacity utilisation. 

India imports more than half of its annual DAP consumption. 

Import prices for July and August deliveries have soared to over $800 per tonne, close to the historic highs of almost $1000 per tonne. 

The sharp surge in imported DAP rates and its dwindling stocks have created a shortage of the critical plant nutrient just when sowing of kharif crops is peaking. 

The ingredients 

Data shows that unlike the surge in imported price of finished DAP from around $611 per tonne in August 2024 to more than $724 in May — a compound annual growth rate (CAGR) of almost 2 per cent — the price of imported rock phosphate has risen by a lower rate of just around 0.39 per cent during the same period. 

  Rock phosphate is the main ingredient for manufacturing DAP. Similarly, the imported price of phosphoric acid (which is derived from rock phosphate) too has risen by around 1.17 per cent CAGR during the same period. 

Ammonia rates, which is also a major ingredient in making DAP, has seen a de-growth of 1.49 per cent from August 2024 to May 2025. 

Imported price of finished DAP is now quoting at over $800 per tonne for July and August deliveries which means that the CAGR growth since August 2024 is even higher. 

Huge consumption 

India consumes around 10-11 million tonnes of DAP annually which is the second largest fertiliser consumed in the country after urea. In the financial year 2025, India imported close to 5 million tonnes of DAP while the rest was produced domestically.

Bulk of the DAP manufactured locally in India as per industry sources is from rock phosphate while there are some units that manufacture DAP from imported phosphoric acid as well. (see chart) 

 

Majority of the raw materials that goes into making DAP locally, that is rock phosphate, is imported as the grades of rock phosphate produced in the country are not suitable for making high grade DAP. But there are some units that have the facility of making phosphoric acid from rock phosphate, industry sources said. 

The Union mines ministry recently proposed linking the average sale price of domestically mined rock phosphate, a key ingredient in making DAP, with international rates to boost its local production. 

Last week, three Indian companies namely IPL, KRIBHCO and CIL, signed an agreement for supplies of around 3.1 million tonnes of finished DAP with Maaden of Saudi Arabia for five years starting 2025-26 onwards with further extension of five years with mutual consent. 

This constitutes around 67.3 per cent of the total DAP imported by India in 2024-25 financial year. 

India in total imported around 1.9 million tonnes of DAP from Saudi Arabia, which is almost 17 per cent more than the quantity imported in the financial year 2024 (FY24). 

India is increasingly looking at Saudi Arabia and other countries in the middle east to secure its DAP supplies following reduction in supplies from China, which was one of the major exporters till a few years back. 

Domestic value addition 

However, experts said that more than importing finished DAP, India should increasingly look at promoting domestic value addition which will ensure that existing capacities are fully utilised while jobs are also created within the country. 

Also, the country needs to move away from the over dependence on DAP and urea towards healthier soil nutrients such as NPKS and other complexes. 

“India is the second largest consumer of fertiliser in the world and the largest importer of fertiliser and also the raw materials that goes into their manufacturing therefore we need supplies from all sides. But, between pure imports and promoting domestic value addition, we should always opt for the latter,” S Nand, former additional director general (ADG) of Fertiliser Association of India and someone who has closely tracked the sector for long told Business Standard.