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India’s Fertilizer Sector- SWOT Analysis, Key Players, and Market Dynamics

July 3, 2024
Yogitasahu

The Indian fertilizer industry directly affects the agricultural sector and overall food security. 

According to the Department of Fertilizers, Government of India, the total fertilizer consumption in India reached 61.6 million tonnes in the 2021-22 fiscal year. The Indian fertilizer market size was valued at approximately INR 1,051 billion (US$14.3 billion) in 2021, with a projected CAGR of 11.9% from 2022 to 2027.

Key Market Segments in Fertilizer Industry

  1. Chemical Fertilizers: These account for the majority of the market share. In 2021-22, urea consumption was 35.0 million tonnes, while P&K (Phosphatic and Potassic) fertilizer consumption was 26.6 million tonnes.
  2. Organic Fertilizers: This segment is growing rapidly due to increasing awareness of sustainable farming practices. The Indian organic fertilizer market is expected to grow at a CAGR of 7.2% from 2021 to 2026.

Top Players in the Indian Fertilizer Industry

  1. Indian Farmers Fertiliser Cooperative Limited (IFFCO)
    • Market Share: Approximately 20-25% of the total fertilizer market
    • Revenue: INR 26,814 crore (US$3.6 billion) in FY 2020-21
    • IFFCO is the largest fertilizer manufacturer and marketer in India
  2. Coromandel International Limited
    • Market Share: Around 15-18% of the phosphatic fertilizer market
    • Revenue: INR 14,205 crore (US$1.9 billion) in FY 2020-21
    • Leading private sector fertilizer company in India
  3. Rashtriya Chemicals and Fertilizers Limited (RCF)
    • Market Share: Approximately 10-12% of the urea market
    • Revenue: INR 9,826 crore (US$1.3 billion) in FY 2020-21
    • One of the largest government-owned fertilizer manufacturers
  4. National Fertilizers Limited (NFL)
    • Market Share: About 15% of urea production in India
    • Revenue: INR 11,906 crore (US$1.6 billion) in FY 2020-21
    • Another major government-owned fertilizer company
  5. Gujarat State Fertilizers & Chemicals Limited (GSFC)
    • Market Share: Approximately 5-7% of the overall fertilizer market
    • Revenue: INR 7,238 crore (US$974 million) in FY 2020-21
    • A leading multi-product group of fertilizers and industrial products
  6. Chambal Fertilisers and Chemicals Limited
    • Market Share: Around 5-6% of the urea market
    • Revenue: INR 12,719 crore (US$1.7 billion) in FY 2020-21
    • One of the largest private sector fertilizer producers in India
  7. Zuari Agro Chemicals Limited
    • Market Share: Approximately 3-4% of the overall fertilizer market
    • Revenue: INR 5,242 crore (US$706 million) in FY 2020-21
    • A major player in both urea and complex fertilizers

Indian Fertilizer Industry Analysis

Strengths:

  • Strong government support through subsidies and policies
  • Large and growing agricultural sector
  • Increasing demand for food production

Weaknesses:

  • High dependence on imports for raw materials
  • Environmental concerns related to chemical fertilizers
  • Price sensitivity of farmers

Opportunities:

  • Growing demand for organic and bio-fertilizers
  • Potential for technological innovations in production and application
  • Expansion of contract farming and precision agriculture

Threats:

  • Volatility in raw material prices
  • Stringent environmental regulations
  • Changing monsoon patterns affecting fertilizer demand

Market Trends in Fertilizer Sector in India

  1. Shift towards Organic: The organic fertilizer market in India is gaining traction. The area under organic farming increased from 0.72 million hectares in 2013-14 to 2.78 million hectares in 2020-21, according to the Ministry of Agriculture and Farmers Welfare.
  2. Government Initiatives: The Indian government’s “Per Drop More Crop” scheme promotes micro-irrigation and balanced use of fertilizers, influencing market dynamics.
  3. Technological Advancements: Adoption of precision farming techniques and smart fertilizers is increasing, improving efficiency and reducing environmental impact.
  4. Import Dependency: India heavily relies on fertilizer imports. In 2021-22, the country imported 10.16 million tonnes of urea, 5.86 million tonnes of DAP, and 2.91 million tonnes of MoP, as per the Department of Fertilizers.

Future Growth Factors in Fertilizer Industry

  1. Population Growth: India’s growing population necessitates increased food production, driving fertilizer demand.
  2. Government Support: Continued subsidies and supportive policies are expected to boost the industry.
  3. Sustainable Agriculture: Increasing focus on sustainable farming practices will drive growth in the organic fertilizer segment.
  4. Technological Integration: Adoption of IoT, AI, and other technologies in agriculture will influence fertilizer application and demand.

Conclusion

The Indian fertilizer industry is at a critical juncture, balancing the need for increased food production with environmental sustainability. While chemical fertilizers continue to dominate the market, there’s a growing shift towards organic alternatives. The industry’s future growth will likely be shaped by government policies, technological advancements, and changing farmer preferences.