- Rising input costs and supply disruptions pressure India's fertiliser industry amid West Asia crisis
- Gas vulnerabilities and spot trade reliance increase market volatility, says expert Aditya Sesh
- Packaging costs surged 60-80%, impacting fertiliser manufacturers' overall production expenses
India's fertiliser industry is facing mounting stress from rising input costs and supply disruptions amid the ongoing West Asia crisis, with stakeholders across the value chain warning of sharper price shocks ahead and calling for policy intervention.
"The fertiliser industry is under stress. Gas remains a key vulnerability. There is still a 20-45% hit being seen despite diversification," said Aditya Sesh, agri expert and a member of the Government of India's expert committee on e-National Warehousing Receipts (e-NWRS). He added that "demand is increasingly being met through spot trades," increasing volatility.
A major pressure point is packaging, where sharp cost escalations are rippling through the supply chain.
"HDPE polymer prices, which are used to make gunny bags or boris, have surged from around Rs 97-98 per kg to nearly Rs 163 per kg, while masterbatch costs have risen from Rs 220 to Rs 340 per kg," said Pitamber Lal Sharma of Shri Navkar Agropack Pvt. Ltd., a manufacturer of agrochemical and fertiliser packaging solutions. "This has led to nearly a 70% increase in the production cost of HDPE bottles," he said, highlighting the impact on packaging suppliers.
Echoing this, Durgesh Agarwal, who is associated with Central India Polysack, a key player in fertiliser and agri-packaging materials, said, "Inputs like PP woven fabric, BOPP film, HDPE and laminates have seen a steep rise of 60-80% in recent weeks," with additional premiums emerging due to tight supply. These pressures are now feeding directly into fertiliser manufacturers' cost structures.
"Availability is a concern, and the import bill is going up tremendously due to oil and dollar prices. Only about 15% of the cost increase has been passed on so far," said Rahul Mirchandani, Chairman of Aries Agro Ltd and President of the Indian Micro Fertiliser Manufacturing Association, which represents speciality fertiliser producers. "If this continues, we expect a much bigger price shock in Q2. Shrinkflation might also happen."
Mirchandani also flagged policy constraints, particularly export curbs. "We are unable to export products like boron, zinc and water-soluble fertilisers. There is a need for an open general licence scheme and easing of export restrictions," he said, reflecting concerns from the speciality fertiliser segment. Beyond immediate cost pressures, structural challenges are also surfacing.
"Packaging costs have effectively doubled in some cases from Rs 20 to Rs 40 and plastic buckets have gone up from Rs 80 to Rs 140," said Suhas Buddhe, Convener of the Integrated Plant Nutrient Management Special Purpose Committee, which advises on fertiliser usage practices. "At the same time, credit access is becoming more difficult, and approvals for new molecules can take up to a year. These need to be fast-tracked."
Budhe also pointed to policy imbalances slowing the transition to alternatives. "Chemical fertilisers are heavily subsidised, while biofertilisers get no subsidy. That reduces incentives for farmers to shift," he said, adding that "biofertilisers alone will not suffice, we need a balanced mix of nutrients."
The government has been pushing a shift towards alternatives such as nano urea, organic fertilisers and residue-free farming, while also expanding regulatory oversight-bringing over 200 biofertilisers under the Fertiliser Control Order. However, industry stakeholders say quality control infrastructure and enforcement capacity are still evolving.
With costs rising across gas, logistics and packaging, industry participants expect further policy support. "There are discussions around additional budgetary support. The government may need to increase subsidy allocations to manage rising import costs," Sesh said. As geopolitical uncertainty persists, the fertiliser sector appears to be at a critical juncture-balancing immediate cost pressures with a longer-term transition towards more diversified and sustainable nutrient solutions.
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