- India’s complex fertiliser industry is expected to see a slower growth trajectory in FY25, with volumes likely to expand only 2–4%, compared with 9% growth last year, according to Crisil Ratings. The moderation is attributed to the limited availability of imported fertilisers, particularly diammonium phosphate (DAP), and a high base effect from FY24’s strong performance.
Speaking to ET Now, Anand Kulkarni, Director, Crisil Ratings, said supply chain disruptions, China’s export restrictions, and regional geopolitical tensions have constrained DAP imports, which form a major component of India’s complex fertiliser basket.
Slower growth due to DAP import constraints
“Slower growth this year will be primarily due to availability issues of imported fertilisers, especially DAP,” Kulkarni explained. “DAP imports typically account for around 30% of India’s overall complex fertiliser volumes. These have been impacted by geopolitical disruptions and trade restrictions.”
India’s complex fertiliser segment — which includes DAP, NPK, SSP, and MOP — grew 9% in FY24, nearly double its decade-long average growth rate of 4–5%. Crisil now expects that base effect to normalize.
“Given the exceptional performance last year and the current DAP supply challenges, a 2–4% growth in FY25 is reasonable,” Kulkarni said.
DAP-NPK product mix to stay at 40:60 in FY25
Within the complex fertiliser category, DAP and NPK dominate the product mix.
Kulkarni noted that while DAP volumes are expected to remain flat this year, NPK fertilisers are likely to grow by 4–6%, supported by domestic manufacturing and substitution demand.
“NPK fertilisers typically contribute 50–55% of overall complex fertiliser volumes. Last year, this share increased to over 60% as DAP volumes fell 12%,” he said.
Farmers, facing DAP shortages, turned to NPK alternatives to maintain soil nutrition levels. “Since production capacities are fungible, manufacturers shifted from DAP to NPK, leading to a 28% surge in NPK volumes in FY24,” Kulkarni added.
Crisil expects the mix of NPK to DAP to remain around 60:40 in FY25. Over the medium term, however, this is likely to normalize back to the traditional 55:45 ratio, as DAP imports recover gradually.
China’s export restrictions weigh on DAP supply
China’s curbs on fertiliser exports have been one of the biggest factors affecting India’s DAP availability.
“China accounted for over 40% of India’s DAP imports in FY24,” Kulkarni said. “However, with China restricting exports in FY25, that share dropped sharply to 18%, leading to supply tightness.”
The supply gap from China has driven India to look for alternative sources and long-term partnerships. The Indian government recently signed a long-term supply agreement with Saudi Arabia, which Kulkarni said could help stabilize DAP availability in the coming quarters.
Crisil expects some improvement in DAP supply from China during the second half of FY25, easing the overall pressure on availability and prices.
Geopolitical tensions drive up costs
Kulkarni pointed out that ongoing geopolitical conflicts have compounded the problem by disrupting trade routes and inflating logistics costs.
“The Iran-Israel conflict, for instance, has affected shipments through the Strait of Hormuz — a crucial route for fertiliser transport,” he explained. “This has led to higher freight, insurance, and shipping costs.”
The Red Sea crisis also impacted shipment timelines and pricing earlier in the year, adding further strain to the global fertiliser supply chain.
“All such disruptions have pushed up DAP prices by nearly 50% year-on-year, increasing input costs for fertiliser producers,” he said.
Government interventions offer some relief
Despite global headwinds, Kulkarni said government measures are providing some cushion to the domestic fertiliser industry. These include long-term import pacts, timely subsidy disbursals, and initiatives to diversify sourcing channels.
“The government’s proactive approach — such as securing supply from Saudi Arabia and other regions — will help reduce dependence on a single source like China,” he said.
Crisil also expects policy support to continue for NPK manufacturers, particularly as domestic players ramp up production capacity to meet demand.
Outlook: Gradual normalisation ahead
While FY25 may see muted growth due to supply bottlenecks and global price volatility, Crisil remains positive on the medium-term prospects of India’s fertiliser sector.
“We expect DAP availability to improve gradually, supported by China’s export resumption and new sourcing agreements,” Kulkarni said.
“Over the next few years, the product mix will stabilize, and growth should revert to the long-term average of 4–5%.”
With India’s agricultural output expanding and the government’s continued emphasis on farm productivity, the fertiliser demand outlook remains structurally strong, even as short-term uncertainties persist.
as a Reliable and Trusted News SourceKey takeaways
- Crisil expects 2–4% growth in complex fertiliser volumes in FY25 vs. 9% last year.
- DAP imports, which make up 30% of total volumes, face disruption due to China’s export curbs.
- NPK share to remain high at 60%, with single-digit volume growth expected.
- DAP prices up 50% YoY amid global geopolitical tensions.
- Government’s long-term supply deals and policy support to aid stability.