Why India Might Be Facing a Urea Scarcity Despite Record Demand
India's urea consumption is projected to reach 40 million tonnes in the current fiscal year due to high demand and fixed retail prices for over a decade. Domestic production has plateaued around 30-31 million tonnes, with imports unable to fully cover growing consumption. New plants have added capacity, but some are underutilized or shut down. Scarcity is emerging, causing supply challenges amid rising demand from expanded crop planting and unchanged subsidies.
India’s urea consumption has surged to near 40 million tonnes in 2024-25, driven by monsoon-induced agricultural demand and fixed maximum retail prices (MRP) since 2012, which keep urea affordable. Sales broke records at 38.8 million tonnes, with ongoing growth expected due to increased sowing of wheat, mustard, potato, and other rabi crops. Consumption doubled from 14 million tonnes in 1990-91 to about 30 million tonnes by 2013-14, then plateaued before rising again, crossing 35 million tonnes in 2020-21. The government mandated neem oil coating on urea to improve nitrogen use efficiency and reduce illegal diversion, but this has not curbed consumption growth. Despite commissioning six new plants (1.3 million tonnes capacity each) from 2019-2022, domestic production peaked around 31.4 million tonnes in 2023-24 and fell slightly to 30.6 million tonnes in 2024-25, partly due to two plant shutdowns. India faces a widening gap as consumption outpaces production, leading to reported shortages, long queues, and low opening stocks for the rabi season. Imported urea only partially fills the gap, with logistical costs making local production more economical for inland regions. The government must consider strategies such as price rationalization, rationing, and use of inhibitors to moderate demand, along with capacity additions estimated at four more plants with 1.3 million tonnes each, to meet projected demand that could reach 45 million tonnes by decade's end. Ongoing challenges include balancing economic and political factors while maintaining fertilizer affordability and supply reliability for Indian agriculture.
