India's Initiative for Urea Manufacturing in Russia

Indian fertiliser companies are planning to set up a urea manufacturing facility in Russia, leveraging Russia’s abundant raw material reserves such as ammonia and natural gas. This strategic move aims to secure a steady supply of this crucial agricultural input and mitigate exposure to fluctuating global prices.

Key Players and Agreements

• Rashtriya Chemicals and Fertilisers (RCF) and National Fertilisers Ltd (NFL), both state-owned, along with Indian Potash Ltd (IPL), have signed a non-disclosure agreement with Russian firms.
• The venture is anticipated to be announced during President Vladimir Putin’s visit to India in December.

Project Details

• The plant is expected to produce over 2 million tonnes of urea annually.
• Key negotiations are ongoing regarding land, natural gas and ammonia pricing, and transportation logistics.

Strategic Importance

• This project aims to insulate India from price shocks and supply disruptions.
• It strengthens economic ties between India and Russia, building upon cooperation in energy, defence, and agribusiness.

Background Context

• India faced a fertiliser shortage during the kharif season due to China's temporary export halt.
• India had to source fertilisers from alternative markets at higher prices.
• Demand for fertilisers has increased due to an expansive monsoon and higher acreage under nutrient-intensive crops.

Fertiliser Control in India

• The Indian government controls fertiliser prices and distribution to ensure affordability and availability for farmers.
• FY25 budget allocation to the Department of Fertilisers increased to ₹1.92 lakh crore.

Current Production and Import Statistics

• India increased domestic urea production to 31.4 million tonnes in FY24 with six new plants commissioned.
• India remains heavily dependent on imports for raw materials despite being the third-largest producer globally.
• A new urea plant is approved in Assam, with an estimated cost of Rs 10,601.4 crore.