Multi-year fertiliser import deal with Russia
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.
- This is the first time in 30 years that the government will be involved in multi-year import negotiations for fertilizers.
- In 1992, India came out with a policy announcing deregulation of soil nutrients except urea.
- 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).
- 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.
- 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.
- 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.
- Fertiliser prices are rallying in the global market. India is one of the biggest importers in the world and Russia is our key supplier.