Self-reliance in urea?

It's a distinct possibility in the near future

In his latest Mann ki Baat address, Prime Minister Narendra Modi counseled farmers to shun excessive use of urea. This plea is in sync with the government’s plan for achieving self-sufficiency in this most consumed and heavily import-dependent fertiliser by curbing its superfluous consumption and boosting domestic production. Self-sustenance in urea seemed out of reach till recently as fresh investment in this sector had virtually dried up due to flawed official policies and inordinate delays in subsidy reimbursement to the industry. But a series of reforms-oriented steps taken in the last few years have altered the investors’ outlook on urea, making self-reliance a distinct possibility in the near future. Indigenous production has, in fact, already begun to look up, clocking an annual growth rate of around 4 per cent since 2013-14, and imports are shrinking. The pace may accelerate as the government and the public sector fertiliser units plan to spend over Rs 50,000 crore on renovation and modernisation of existing plants and revival of closed fertiliser factories.

The process of fertiliser reforms, which paved the way for the anticipated turnaround of this sector, was actually initiated by the previous United Progressive Alliance (UPA) government by introducing a new investment policy in 2012. However, it did not elicit the desired response from potential investors till it was amended and made more attractive by the present government in 2014. The caveat that the benefits of the revised policy would be available to only those units which go on stream within five years helped to expedite matters. Besides, a New Urea Policy was launched in 2015 which focused specifically on maximising domestic output, promoting energy efficiency in urea production and rationalising subsidies. It offered incentives to fertiliser units to produce more than their reassessed capacities.

Policy apart, some well-advised supplementary measures taken by the government, too, helped to prop up urea production. For one, the few plants that still use naphtha as feedstock have been allowed to continue production till they get assured gas supply. Besides, steps are on to revive fertiliser plants at Ramagundam, Talcher, Gorakhpur, Sindry and Barauni, apart from setting up a new unit at the premises of the Namrup plant. A new gas pooling policy has been put in place to supply gas to all urea units at uniform rates. 

Among the moves that are intended particularly to curb extravagant use of urea and prevent its diversion to non-agricultural activities, the most noteworthy are neem-coating of urea, packing it in smaller bags and introducing soil health cards. Neem-doped urea needs to be applied in relatively smaller doses to get the same crop yields. Besides, it is unfit for non-farm use. Packing of urea in 45 kg bags, instead of the usual 50 kg ones, too, helps to economise on its use because the farmers normally apply it in terms of the number of bags per hectare. Soil health cards, on the other hand, recommend the laboratory test-based exact doses of different fertilisers needed for each farm holding. However, the inadequacy of soil testing laboratories and the indifferent quality of test results are holding back the scheme from delivering its full benefits. This issue needs to be addressed urgently. Moreover, urea also needs to be brought under the nutrient-based subsidy regime to ensure balanced use of the three major plant nutrients – nitrogen, phosphate and potash – to maintain soil fertility.