After managing to reduce urea subsidy despite high global prices during FY23-24 and stepping up allocation for organic fertilizers by more than 16 times, the focus on nano di-ammonia phosphate (nano-DAP) may eventually help the government to bring down subsidy on phosphatic fertilizers substantially. This is even as the debate over the efficiency of liquid nano fertilizers still continues.

In her Budget speech, Finance Minister Nirmala Sitharaman said: “After the successful adoption of nano-urea, application of nano-DAP on various crops will be expanded in all agro-climatic zones.” She did not explain further.

The minister has allocated ₹100 crore for promotion of organic fertilizers during FY25 against ₹6 crore in FY24 (RE). A new scheme for promotion of organic fertilizers providing Market Development Assistance (MDA) and promotion of Research and Development as GOBARdhan initiatives, was introduced in 2023. The PM-PRANAM scheme was also launched last year to grant financial incentive under a formula to states if they reduce usage of chemical fertilizers.

New beginning

Launching the commercial roll out of nano-DAP of fertiliser co-operative IFFCO in April last year, Union Co-operation Minister Amit Shah had said the introduction of nano variant of fertiliser was a new beginning towards making India self reliant on fertiliser as it would increase farm productivity without impacting the soil health. Apart from IFFCO, Coromandel International and Zuari have got government’s approval to manufacture nano-DAP.

Though it is claimed that a bottle (500 ml) of nano-DAP is equivalent to one bag (50kg) of conventional DAP, the price of IFFCO’s nano-DAP has been kept at ₹600 per bottle (without subsidy) against ₹1,350/bag (with subsidy) for conventional DAP. Coromandel has also been selling its nano-DAP priced at about ₹630 a bottle.

“Our recent introduction of Nano Shakti nano-Urea and Nano Shakti nano-DAP align with the government’s focus on advancing sustainable farming practices to empower farmers, boost crop yields, and enhance soil health for a resilient and prosperous agricultural sector,” said Madan Pandey, MD, Zuari Farmhub.

“Expanding the usage of nano-DAP across all agroclimatic zones is a win-win for the farmer as well as the government,” said Pushan Sharma, Director-Research, CRISIL Market Intelligence & Analytics. He said a 500-ml bottle of nano DAP is equal to a 50-kg bag of conventional DAP for a farmer, but it has been priced at half of the rate a bag commands, he said. For the government, it has the potential to reduce imports and the subsidy bill.

Beneficial move

This (decision to scale up nano-DAP) is particularly beneficial as India imports 60 per cent of its DAP requirement, whereas share of DAP is 14-15 per cent in the overall fertilizer subsidy, Sharma said.

The urea subsidy in the Revised Estimates (RE) for FY24 has been scaled down to ₹1.29-lakh crore from ₹1.31-lakh crore (BE). The government has allocated ₹1.19-lakh crore as urea subsidy for FY25. On the other hand, the subsidy for phosphatic (P) and potash (K) fertilizers has been raised to ₹60,300 crore in RE from ₹44,000 crore in BE of current fiscal and has been provisioned ₹45,000 crore for FY25.

For the Rabi season 2023-24, the government has fixed the subsidy for P at ₹20.82/kg and K at ₹2.38/kg, under the nutrient-based subsidy scheme. Import of DAP declined by 12.9 per cent to 45.98 lt during April-November of FY24 from 52.81 lt year-ago. But, MOP import surged 50.8 per cent to 17.63 lt from 11.69 lt, mainly due to low base effect.

The monthly average Free on Board (FoB) price of imported urea from Middle East declined to $282/tonne in July 2023 from $332 in April and has increased to $402 in December. Imported DAP price (CFR) in India was seen at an average $595/tonne in December 2023 — up from $557 in April.