India Fertilizer Market Outlook to 2028

India Fertilizer Market Overview

The India fertilizer market, valued at USD 41 billion, is driven by several factors, primarily the government's proactive subsidies under the Nutrient-Based Subsidy (NBS) Scheme, which has fueled fertilizer demand. The market has witnessed steady growth as farmers aim to increase agricultural productivity through chemical and organic fertilizers. The expanding agricultural sector and growing need for sustainable farming practices have further boosted the demand for fertilizers across the country.

Major fertilizer-consuming regions in India include Uttar Pradesh, Punjab, Haryana, and Andhra Pradesh. These regions have a dominant presence due to their extensive agricultural activities and the availability of fertile land, which drives higher fertilizer consumption. The fertile plains, irrigation facilities, and government initiatives supporting farming in these areas make them critical hubs for fertilizer usage in India.

The Nutrient-Based Subsidy (NBS) Scheme continues to play a critical role in the affordability and accessibility of fertilizers in India. In 2023-24, the government set aside 71,000 crore for the NBS scheme, covering key nutrients like nitrogen, phosphorus, and potassium. The subsidy framework ensures that farmers can purchase fertilizers at regulated prices, while fertilizer companies are compensated for selling below market rates.

India Fertilizer Market Segmentation

By Product Type: The market is segmented by product type into nitrogenous fertilizers, phosphatic fertilizers, potassic fertilizers, and organic/bio-fertilizers. Nitrogenous fertilizers, especially urea, have a dominant market share due to their affordability and wide applicability in cereal crops like rice and wheat, which form the backbone of India's food security. Urea remains the preferred choice for farmers, driven by government subsidies and the constant need to replenish nitrogen levels in the soil to maintain high crop yields.

By Crop Type: The market is segmented by crop type into cereals & grains, fruits & vegetables, oilseeds & pulses, and commercial crops. Cereals and grains, particularly rice and wheat, dominate the fertilizer application segment, owing to their critical importance in Indias food security program. Fertilizer consumption is highest in these crops as the country is a leading producer, and they account for the bulk of Indias food grain output.

India Fertilizer Market Competitive Landscape

The India fertilizer market is consolidated with a few major players dominating the market, including companies with strong government ties and those focusing on sustainable fertilizer solutions. This consolidation highlights the significant influence of these key companies in determining market trends, pricing policies, and distribution channels across the country.

Company

Establishment Year

Headquarters

Fertilizer Capacity

Number of Employees

Revenue

R&D Expenditure

Distribution Network

Market Share

Indian Farmers Fertilizer Cooperative (IFFCO)

1967

New Delhi

Coromandel International Limited

1961

Hyderabad

National Fertilizers Limited (NFL)

1974

Noida

Rashtriya Chemicals & Fertilizers Ltd.

1978

Mumbai

Gujarat State Fertilizers & Chemicals Ltd. (GSFC)

1962

Vadodara

India Fertilizer Industry Analysis

Growth Drivers

Government Subsidies and Schemes: The Indian government has significantly supported the fertilizer market through subsidies like the Nutrient-Based Subsidy (NBS) Scheme and direct income support to farmers via PM-KISAN. In the fiscal year 2023-24, the government allocated 1.75 lakh crore for fertilizer subsidies, ensuring farmers have access to fertilizers at affordable prices. The NBS scheme helps regulate the prices of key fertilizers such as nitrogen, phosphate, potash, and sulfur. Additionally, under the PM-KISAN initiative, 6,000 per annum is provided to over 110 million farmers, which can aid in purchasing fertilizers.

Increasing Agricultural Output and Crop Diversification: Indias agricultural output is steadily increasing, driven by higher demand for food grains and crop diversification. India produced over 315.72 million metric tons of food grains in 2023, a rise from previous years. The growing demand for fruits, vegetables, and pulses, in addition to staples like rice and wheat, is pushing farmers to adopt more fertilizers for enhanced yields. Fertilizers, particularly nitrogen-based ones, remain integral for meeting the nutritional needs of different crops, with farmers relying on urea and DAP to support diverse crops.

Technological Advancements in Fertilizer Application: Technological innovations like precision farming and digital platforms are revolutionizing fertilizer application. In 2023, the Indian government launched initiatives to integrate digital tools such as soil health cards and drone-based fertilizer application. About 249 million Soil Health Cards had been distributed as of 2024, helping farmers optimize fertilizer use. Digital platforms, including apps like e NAM (National Agriculture Market), provide real-time data to farmers, improving the efficiency of fertilizer use. The adoption of these tools enhances productivity and ensures environmentally sustainable farming practices.

Market Challenges

Environmental Concerns and Soil Degradation: Indias heavy reliance on chemical fertilizers has led to significant soil degradation. Excessive nitrogen application is a major concern, with urea consumption exceeding 33.5 million tons in 2023. This overuse has led to declining soil fertility and contamination of groundwater, posing long-term environmental risks. Additionally, the carbon footprint of fertilizer production and use is under scrutiny as India seeks to reduce its emissions under international climate commitments.

Regulatory Barriers: Indias fertilizer market is heavily regulated, with policies like the Fertilizer Control Order (FCO) dictating product quality standards and distribution mechanisms. In 2023, stringent environmental regulations related to the manufacturing of fertilizers increased the operational costs for producers. Furthermore, the governments intervention in fertilizer pricing, through schemes like the NBS, limits market flexibility. These regulatory barriers, while ensuring affordability and safety, constrain innovation and competition within the fertilizer sector.

India Fertilizer Market Future Outlook

The India fertilizer market is expected to see steady growth driven by continued government support for the agricultural sector, technological advancements in precision farming, and a growing shift toward organic farming. The countrys emphasis on becoming self-reliant in urea production through initiatives like Atma Nirbhar Bharat will also foster market expansion. Furthermore, the increasing focus on eco-friendly and bio-based fertilizers, coupled with rising consumer awareness about sustainable farming practices, is likely to create new opportunities for growth in the market.

Future Market Opportunities

Increasing Demand for Micro-Nutrients and Specialty Fertilizers: The demand for micro-nutrients and specialty fertilizers is on the rise as Indian farmers focus on improving crop quality. In 2023, micro-nutrient consumption, especially zinc and boron-based fertilizers, grew by 18% due to their effectiveness in enhancing crop resilience. The shift towards more specialized fertilizers reflects farmers growing awareness of balanced soil nutrition, aiming to increase crop yields and reduce dependency on traditional NPK fertilizers.

Expansion in Marginal Lands and Irrigated Areas: The Indian government continues to invest in the expansion of irrigated areas, with 105 million hectares under irrigation as of 2023, up from 96.4 million hectares a decade earlier. This expansion into marginal and semi-arid lands provides a unique opportunity for fertilizer companies. Crops grown in these areas require tailored fertilization to improve soil quality, allowing companies to introduce new fertilizer formulations that support crop production in previously underutilized lands.
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