BYGROUP-1

India is the third largest producer and 2nd largest consumer of fertilizer in the world. The private sector produced 44.73 % of nitrogenous fertilizers and 62.08 % of phosphatic fertilizers in 2006-07.
Total production of fertilizers in india-206.5mt .

The production of urea in India has reached near self-sufficiency.

The requirement of the nitrogenous fertilizers is met through the indigenous industry In the case of phosphatic fertilizers, the raw materials and intermediates are imported in large scale. The requirement of potash (K) is met entirely through imports.

No fertilizer unit of India has any reserve of potash. 65 large-sized fertilizer plants in India . 32 units-urea 20 units-DAP & complex fertilizers 13 units-ammonium phosphate & CAN

Started in 1906 with SSP production facility at Ranipet near Chennai. Started operating in a big scale since 1940s, when the Fertilizer & Chemicals Travancore of India Ltd. and the Fertilizers Corporation of India were set up in Kerala and Bihar

Pre Liberalization Post Liberalization -Phase 1: 2000-01 and 2001-02 -Phase II (2002-03-2003-04) -Phase III (2004-05-2006-07) W T O Implications

Most companies are expecting approval for their huge capital expenditure plans from department of fertilizer and industry Indian fertilizer companies joined hands with Jordan, Senegal, Oman, Morocco, Egypt etc The demand for fertilizer has increased by 5% (21 June 2010, Rashtriya Chemicals and fertilizer) 10% increase in Urea price in April 2010 Fertilizer subsidy has taken largest share for 58.7% of total subsidies in 2008-09

The Fertilizer Industry in India started its first manufacturing unit of Single Super Phosphate (SSP) in Ranipet near Chennai with a capacity of 6000 MT a year. Total capacity of the industry has reached a level of 121.10 lakh MT of nitrogen (inclusive of an installed capacity of 208.42 lakh MT of urea after reassessment of capacity) and 53.60 lakh MT of phosphatic nutrient.

The Indian fertilizer industry has a capacity of 56 lakh MT of phosphatic nutrient and 121 lakh MT of nitrogen. While the private sector has a huge installed capacity for phosphatic fertilizers, capacity utilization of nitrogenous fertilizers is higher in the public sector.

Sector-wise, Nutrient-wise Installed Fertilizer Manufacturing Capacity as on 31.01.2007 63 large units dedicated to the production of fertilizers. 9 units produce ammonium sulphate while 38 units produce urea. 79 small and medium scale units producing single superphosphate.

Import of urea, DAP & MOP 6.61, 7.41, 6.36 Mte Retail prices of urea increased from Rs.4830/per tonne during 2009-10 to Rs.5310/- per tonne during 2010-11 P & K as per NBS Policy, retail prices were opened & market driven NPK use ratio changed from 4.3:2:1 (2009-10) to 5:2.4:1(2010-11)

MODEST INCREASE IN DOMESTIC PRODUCTION

P R O D U C T I O N (Mte)

HIGH IMPORTS

I M P O R T S (Mte )

HIGH GROWTH IN CONSUMPTION

C O N S U M P T I O N (MTe )

Determinants of fertilizer demand are:

Rainfall and irrigation facilities Relative prices of fertilizers Cropping pattern Government policy National Income & Growth

India's demand for fertilizers in 2007-08 was 26 MM tons, which went up to 29 MM tons in 2008-09 against a supply of 20 MM tons in 2008-2009. The demand for fertilizers in 2011-12 is forecasted to be around 35.5 MM tons. More fertilizer projects are in the pipeline. Gujarat is expected to play a leading role in fertilizer production. Indian companies have penetrated the overseas market, signaling a new phase for the industry. The per hectare consumption of fertilizers in nutrients terms increased from 105.5 kg in 2005-06 to 128.6 kg in 2008-09.

Undertaking inspection and analysis of imported and indigenous fertilizers Standardization and development of method of analysis Training of fertilizer enforcement officers and analysts. Acting as a referee laboratory Providing technical guidance to the Central and State governments on Fertilizer Quality Control Laboratories. Fertilizer movement control order(1973)

FERTILISER CONTROL ORDER 1957 FERTILISER MOVEMENT CONTROL ORDER 1973 RETENTION PRICE SCHEME 1977 BLOCK DELIVERY SCHEME 1980-81 JOINT PARLIAMENT COMMITTEE ON FERTILISER PRICING 1991 FERTILISER PRICING POLICY 1997 NORMATIVE REFFERAL PRICE (BASED ON LONG RUN MARGINAL COST) 1997-98

BUREAU OF INDUSTRIAL COSTS & PRICES 1998-99 NEW PRICING SCHEME 2002 FERTILISER MONITORING SYSTEM 2007 USE OF CUSTOMISED FERTILISER (ADDTL CLAUSE IN FCO,1985) 2008 FREIGHT SUBSIDY 2008 NBS 2010 SECONDARY & MICRONUTRIENT (B,ZN) 2010 FEEDBACK STOCK POLICY 2011

Farm gate price of urea is amongst the lowest in the region and is heavily subsidised. Retention price of controlled fertilizers is fixed in every 3 years. 1992-govt. decontrolled import of complex fertilizers (DAP & MOP). For each decontrolled fertilizer, the Maximum Retail Price (MRP) is indicated by Central Government except for Single Super Phosphate, the MRP of which is indicated by each State/UT Government.

NBS policy on decontrolled Phosphoric and Potassic fertilizer w.e.f 1 st April ,2010. Fix subsidy on N,P,K,S for 2010-11 Additional per ton subsidy for subsidized fertilizer carrying other secondary nutrients and micronutrients.eg in Zn,Boron. Retail prices fixed by companies at farm gate level 10% increase in price of urea (Rs 4830 to Rs 5310)

Started from 1 April 2003 Objective- encouraging efficiency based fertilizer pricing High Powered Fertilizer Pricing Policy Review Committee (HPC) At present, the maximum retail price (MRP) of urea is Rs. 483 a quintal, while DAP costs Rs. 935 a quintal and MOP Rs. 445.50 a quintal. First 2 stages-prices was decided on the basis of energy consumption Third stage(2006-10)-conversion of all farms into natural feed stock.

On 31st March11, Govt announced buybachkscheme of fertliser bonds through RBI in 2 tranches of 50% each Govt decided to compensate at least 50% of the loss on sale of bonds to RBI

INDIAN AGRICULTURE FOOD GRAIN PRODUCTION SOIL FERTILITY IN INDIA EMPHASIS ON IMPORT IMPROVEMENT OVER CURRENT SCENARIO

LONGTERM SUSTAINABILITYNATURAL RESOURCES, PRICE- ENERGY,SUBSIDISED PRICE POLICY

GREEN REVOLUTIONGROWTH SUSTAINABLE AGRICULTURE R&D CAPACITY IMPORT SOIL HEALTH FERTILISER MARKETING TECHNOLOGY

OPPORTUNITY

THREATS

Per capita fertliser consumption is low New joint ventures Deregularisation Fast growing population 2/3 population still depends on farming as a source of livelyhood

Uncertainty prevailing over policy Late payment of commision Shortage of feedstock Biofertilisers lack of monitoring lead to anti competitive at the level of distribution of fertilizers to end consumers.

WEAKNESS

STRENGTHS

High inventory carrying cost Liquidity crunch Deterioration of quality due to prolonged storage Scarcity Lower import leading to High International price Additional burden on exchequer Non-availability of fertilizer in time leads to lesser yield from farm Market scarcity Labour shortage Stringent Govt. Policy Supply Constraints Production- Technical/Equipment problem Feedstock/raw material shortage Power shortage

High International Price Low Exportable surplus HYV Seeds Availability Credit availability Promotion & awareness Demand factor foreign investments in India

Political Factors Government Support to Urea Manufacturing Ineffective Implementation of Government Regulations Government Support for R&D in Chemical Industry NBS Policy

Economic Factors High Taxes & Cost of Finance Eat into Margins Ongoing Reforms to Ensure a Favorable FDI Policy New investment Policy Technological Factors: Role of ICT Social Factors Low-Cost Human Capital and Technological Expertise Surge Expected in Per Capita Chemicals Consumption

Fertilizer Corporation of India Limited (FCIL) Hindustan Fertilizer Corporation Limited (HFC) Pyrites, Phosphates & Chemicals Limited Rashtriya Chemicals and Fertilizers Limited (RCF) National Fertilizers Limited (NFL) Projects &Development India Limited (PDIL) The Fertilizers and Chemicals Travancore Limited (FACT) Madras Fertilizers Limited (MFL) FCI Aravali Gypsum & Minerals India Limited, Jodhpur

The Scientific Fertilizer Co Pvt Ltd Coromandel Fertilizers Deepak Fertilizers and Petrochemicals Corporation Limited Gujarat State Fertilizers &Chemicals Limited Tata Chemicals Limited Chambal Fertilizers Nagarjuna Fertilizers and chemicals limited Godavari Fertilizers and Chemicals limited Zuari Industries limited Apratim International Devidayal Agro Chemicals Aries AgroVet DSCL

Fertilizer Producers

Consumer base-high

Industry Competitors Bargaining power of suppliers-low

Barriers to entry-high
Rivalry among existing firmslow

Bargaining power of buyers-low

Here, Suppliers are Raw materials Suppliers; Buyers are Distributors. Bargaining power of suppliers-LOW Bargaining power of buyers-LOW Barriers to entry HIGH Consumer Base-HIGH Rivalry among players LOW

Fertilizer Distributors

Threat of substituteslow

Bargaining power of suppliers-high

Industry Competitors

Barriers to Barriers to entry-high

Rivalry among existing firms-low

Bargaining power of buyers-low

Here Suppliers are the producer; Buyers are the farmers. Threats of substitutes LOW Bargaining Power of Suppliers- HIGH Rivalry among existing players- LOW Bargaining power of the buyer(farmer) LOW Barriers to entry- HIGH

Fertiliser Industry & food processing Fertiliser industry & rural market Fertiliser industry & seeds

Greater dependency of country on imports( also feedstock) Unable reduce burden of government in subsidiary rates Infrastructural bottlenecks Uncertainties in government policies Small size of older plants Low cost of production

EXTENSION OF FERTLISER UNDER NBS DECANALISATION OF UREA FERTILISER INDUSTRY SHOULD BE AN INDUSTRY OF NATIONAL IMPORTANCE INVESTOR POLICY FOR LONG TERM INVESTMENT IN UREA VAT HOLIDAY & SUBSIDISED ELECRICITY SUPPLY TAX & DUTIES

INDIAN JOURNAL OF FERTILISER, SEP11 ECONOMIC PLANNING FAI ANNUAL SEMINAR 2010 ROLE OF ICT IN FERTILIZER & AGRICULTURE SECTOR AND FUTURE PROSPECTS (S. C. MITTAL, IFFCO) COMPETITION ASSESSMENT OF FERTILIZER SECTOR: INDIA 2011 DEMAND ANALYSIS & FORECASTING THE FERTILIZER INDUSTRY IN INDIA 2010-12 RURAL MARKETING THE HINDU, 28TH FEB11

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