GS Paper - 2 (International Relations)

India is in its first government-to-government negotiations with Russia for the long-term supply of fertilizers, the government said, hedging against geopolitical instability and high global prices. India is a top importer of urea and other soil nutrients needed to feed its huge agriculture sector, which employs about 60% of the country's workforce and accounts for 15% of $2.7 trillion economy.

What

  1. This is the first time in 30 years that the government will be involved in multi-year import negotiations for fertilizers.
  2. In 1992, India came out with a policy announcing deregulation of soil nutrients except urea.
  3. The sources said India is aiming to lock in 1 million tonnes a year each of di-ammonium phosphate (DAP) and potash; and about 800,000 tonnes a year of a mix of nitrogen, phosphorus, potassium (NPK).
  4. Rashtriya Chemicals and Fertilizers, National Fertilizers, Madras Fertilizers, Fertilisers And Chemicals Travancore and India Potash Ltd are expected to sign a 3-year deal for DAP, potash and complex fertilisers with Russian companies.
  5. In 2021 some states in India faced shortages of fertilisers after export restrictions by China and a record surge in global prices, triggered by factors including high energy costs and Western sanctions against Belaruskali, the world's second-largest potash producer.
  6. India allows companies to fix the retail price of fertilisers. But to ensure that farmers are not hit by a rally in global prices, New Delhi provides a subsidy to fertiliser companies to keep an indirect check on retail prices.
  7. Fertiliser prices are rallying in the global market. India is one of the biggest importers in the world and Russia is our key supplier.