To ensure a steady supply of fertilizer, RCF, NFL, and Indian Potash Ltd have signed non-disclosure agreements (NDAs) with Russian companies in preparation for India’s first urea factory in Russia.
In order to guarantee long-term fertilizer supply and lessen its vulnerability to global price shocks, India is getting ready to establish its first urea production plant in Russia, individuals involved with the talks told Economic Times.
With the support of Rashtriya Chemicals and Fertilizers (RCF), National Fertilizers Ltd (NFL), and Indian Potash Ltd (IPL), the planned project seeks to access Russia’s vast natural gas and ammonia deposits, two essential raw resources that India does not have.
Russian President Vladimir Putin’s December visit to India, which would represent a significant new chapter in India-Russia economic relations, might see the announcement of the initiative, according to officials.
Potash players and state companies sign NDAs with Russian partners
To start the project’s foundation, RCF, NFL, and IPL have already signed non-disclosure agreements (NDAs) with Russian businesses, according to Economic Times.
According to one of the individuals quoted, the plant is anticipated to generate more than two million tons of urea per year. Land distribution, natural gas and ammonia prices, and transportation logistics are the main topics of negotiation at the moment.
According to one source who spoke to Economic Times, “we are seeing seriousness and alignment on both sides,” and the talks are moving along gradually.
According to Economic Times, the corporations did not reply to inquiries. Moneycontrol was unable to confirm the information on its own.
Why Russia?
Despite being one of the biggest consumers of fertilizer worldwide, India is still reliant on imports for these feedstocks, therefore Russia’s enormous gas and ammonia deposits make it an ideal partner.
After the upheaval of the last two years, when global trade restrictions and conflicts upended fertiliser markets, India hopes to protect itself from future price shocks and supply interruptions by establishing a facility in Russia.
Context: The fertilizer shortage revealed supply issues
The idea comes after China stopped exporting urea and other soil nutrients during this year’s kharif (monsoon) season due to a severe fertilizer shortage.
India had to rush to find substitute supplies at far higher costs due to the abrupt freeze, which put a burden on the subsidy bill and raised questions about food supply.
Due to farmers expanding their land under nutrient-intensive crops like maize, the need for fertilizer has increased due to a well-distributed monsoon. When wheat, one of the most nutrient-dense crops, is grown during the rabi (winter) season, demand is expected to increase once again.
While domestic capacity is increasing, there are still deficiencies in raw materials.
With the assistance of six new facilities placed into service by Hindustan Urvarak & Rasayan Ltd (HURL), Chambal Fertilizers & Chemicals, Matix Fertilizers & Chemicals, and Ramagundam Fertilizers & Chemicals Ltd (RFCL), India’s domestic urea production hit a record 31.4 million tonnes in FY24.
Additionally, to increase eastern capacity, the cabinet authorized a new urea factory in Assam, projected to cost Rs 10,601 crore.
However, projects like the one in Russia are strategically important since India still relies on imports for raw materials like ammonia and natural gas.
Despite being the world’s second-largest user and third-largest producer of fertilizers, India is nevertheless susceptible to fluctuations in commodity prices.