The Green Crisis: How India’s Urea Addiction is Pushing it Towards a Fertiliser Precipice 

India is facing a looming and structural urea scarcity, driven by a severe demand-supply imbalance where consumption, set to reach a record 40 million tonnes this fiscal year, is dramatically outpacing stagnant domestic production of only 30-31 million tonnes.

This crisis is primarily a policy-made problem, fueled by a decade-long freeze on the urea’s maximum retail price, which has kept it artificially cheap and led to massive overuse, rendering interventions like neem-coating ineffective. While domestic production has been hampered by plant closures and underperforming new facilities, making imports necessary, the widening gap signals an urgent need for politically difficult solutions, including price rationalization and supply-side investments, to avert a permanent threat to the country’s agricultural security.

The Green Crisis: How India’s Urea Addiction is Pushing it Towards a Fertiliser Precipice 

Meta Description: India faces a looming urea crisis fueled by a dangerous imbalance between skyrocketing consumption and stagnating domestic production. This deep dive explores the roots of the dependency, the failed policy fixes, and the tough political choices ahead. 

Introduction: The Queues Tell the Story 

In the early morning haze across vast swathes of rural India, a familiar sight has returned: long, winding queues of farmers waiting for their monthly quota of urea. These queues, more pronounced after a bountiful monsoon, are the most visible symptom of a deepening national crisis. India, the world’s second-largest consumer of fertilisers, is staring at a severe and structural scarcity of urea, the most vital ingredient for its food security. 

This isn’t a temporary supply chain glitch. It is the inevitable result of a policy environment that has, for over a decade, incentivised consumption while discouraging a parallel growth in production. The numbers are stark: consumption is set to hit a record 40 million tonnes this fiscal year, while domestic production has stagnated at around 30-31 million tonnes. The gap, once comfortably bridged by imports, is now widening alarmingly, creating a vulnerability that threatens to undo the gains of the Green Revolution. 

The Relentless Rise of Urea: A Policy-Made Monster 

To understand the crisis, one must first understand the sheer economic irrationality that governs India’s fertiliser market. Since 2012, the Maximum Retail Price (MRP) of a 45kg bag of neem-coated urea has been frozen at a heavily subsidised Rs 242. This price is political dynamite, untouched by successive governments. 

Compare this to other fertilisers: 

• Urea: Rs 5,628 per tonne 

• Single Super Phosphate (SSP): Rs 11,500-12,000 per tonne 

• Di-Ammonium Phosphate (DAP): Rs 27,000 per tonne 

The message to the farmer is unambiguous. Urea is not just the cheapest option; it is, for all practical purposes, the only affordable source of primary nutrients. It provides a concentrated 46% Nitrogen, making it highly effective for a quick green boost to crops. Faced with rising costs of other inputs like pesticides, labour, and diesel, the rational farmer will naturally over-rely on the one input whose price has been constant for over a decade. 

This has created a vicious cycle. The overuse of urea degrades soil health, reducing the efficiency of other nutrients and locking farmers into a cycle where they need ever-increasing amounts of urea to maintain yields. 

The Illusion of a Fix: Why Neem Coating and Nano Urea Failed 

The government has not been entirely blind to the problem. In 2015, it made neem-coating of all domestic and imported urea mandatory. The theory was sound: the coating would slow the release of nitrogen, improve nutrient efficiency, and crucially, curb the illegal diversion of subsidised urea for non-agricultural uses like milk adulteration and plywood manufacturing. 

In practice, consumption barely flickered. After a brief dip to 29.9 million tonnes in 2017-18, it has since soared, breaking records year after year. The reasons are twofold. First, while neem coating may have improved efficiency marginally, it did not change the fundamental price distortion that makes urea irresistibly cheap. Second, the expansion of irrigation and a shift towards high-value, nitrogen-loving crops like maize, fruits, and vegetables have only increased the aggregate demand. 

Similarly, the launch of IFFCO’s Nano Urea—a liquid fertiliser promoted as a replacement for a bag of conventional urea—has so far failed to make a dent. Questions about its efficacy, ease of application compared to traditional granules, and scalability have prevented it from being the silver bullet it was hoped to be. 

The Supply Side Squeeze: Shuttered Plants and Stagnant Output 

While demand has been on a relentless upward climb, the supply side tells a story of missed opportunities and emerging bottlenecks. 

Between 2019 and 2022, six new plants with a combined capacity of nearly 8 million tonnes came online, providing a much-needed boost. However, this momentum has stalled. Not all new plants are operating at full capacity due to technical glitches or gas supply issues. More alarmingly, two existing plants—Nagarjuna Fertilizers in Kakinada and Kanpur Fertilizers & Chemicals—have shut down, wiping out nearly 2 million tonnes of annual capacity. 

One of these closures is particularly symbolic. The Kanpur plant’s assets were acquired by a green energy company to be converted into a renewable hydrogen and ammonia project. This signals a global shift that India must navigate: while the world moves towards green ammonia, India’s immediate crisis is about securing enough conventional urea to feed its population. 

The result? Domestic production, which peaked at 31.4 million tonnes in 2023-24, is now dipping. With opening stocks for the current rabi season at a precarious 3.7 million tonnes (down from 6.3 million tonnes last year), the buffer to manage any import disruption has dangerously thinned. 

The Fork in the Road: “Make” or “Buy” and The Political Challenge 

India now faces a critical strategic choice: how to bridge the 10-15 million tonne gap that is projected to persist. 

The “Buy” option—ramping up imports—is a quick fix with significant drawbacks. Global urea prices are volatile and subject to geopolitical shocks. Furthermore, importing in bulk requires costly logistics: discharging at ports, bagging, and then transporting the heavy bags to consumption centres in North and East India, which adds tremendous cost to the exchequer’s subsidy bill. 

The “Make” option—building new domestic plants—is capital-intensive but more sustainable in the long run. The advent of a national gas grid and numerous LNG terminals has made it feasible to pipe natural gas (the primary feedstock for urea) to hinterland plants. For the northern and eastern grain belts, it is more economical to “make” urea by importing gas than to “buy” and transport the finished product. 

Analysts estimate India needs at least four new 1.3 million tonne plants to add 5 million tonnes of capacity. This requires a clear policy signal and investment. However, no private player will invest billions without long-term policy certainty, especially when the end-product is sold at a political, not market-based, price. 

Conclusion: Beyond Quick Fixes – The Need for a Courageous Overhaul 

Managing India’s urea crisis is no longer an agronomic or economic challenge alone; it is a profound political test. The solutions are known but painful. 

• MRP Rationalisation: Even a calibrated increase, perhaps doubling the price with a direct benefit transfer (DBT) cushion for small farmers, is essential to signal scarcity and reduce rampant overuse. As one source noted, even at double the price, urea would still be the cheapest fertiliser on the market. 

• Rationing: Implementing a per-farmer cap on subsidised urea, linked to landholding, could curb hoarding and diversion. 

• Promoting Alternatives: Aggressively subsidising and promoting a more balanced use of NPK fertilisers and organic manure is crucial for long-term soil health. 

• Investing in Supply: The government must create a favourable environment for investing in new domestic production capacity to reduce import dependency. 

The queues for urea are more than just lines; they are a warning. They signal a system on the brink. The choices made in the next few years will determine whether India can secure the fertiliser needs for its future harvests or if it will be perpetually vulnerable, standing in line for a resource it has become dangerously addicted to. The era of easy fixes is over; the time for a courageous, holistic policy overhaul is now.