Yet, not just the government, but sections within the industry too think that India can become a zero-import country in urea in the next five years, with reforms like neem coating and direct benefit transfer (DBT), coupled with a revival and expansion of domestic production capacity. A total of 64 fertiliser units in India have an installed capacity of 33 million tonnes, according to the data on the website of the department of fertilisers.
Matix fertilisers has commissioned its newest greenfield fertiliser plant in Panagarh, West Bengal, which is currently running at 40 per cent capacity, but would ultimately add 1.3 million tonnes annually to overall production in the country. Chambal Fertilisers, in its new plant at Gadepan, Rajasthan, will add another 1.3 million tonnes to India’s annual production matrix after January 2019. Reviving five closed fertiliser plants — one each in Odisha, Telangana, Bihar, Jharkhand, and Uttar Pradesh — and constructing one in Assam, in addition to private investment, would add up to more than 9 MT to production, making the prospects of self-sufficiency look bright. But a section in the industry feels that it might take time as just one plant has obtained financial closure. “How long this will take is open to question as many projects are at a nascent stage,” an official said. The initial progress of neem coating and DBT, too, makes the ambition of self-sufficiency unrealistic.
Neem coating of urea, which the prime minister has himself lauded on numerous occasions, improves the supply of nitrogen to crops, thereby reducing the adverse chemical impact of excess fertiliser use and improves the yield.
It has the potential to save around 10 per cent of India’s annual urea consumption, about 3 MT of the 30 MT, owing to several factors: Neem coating would reduce the need of urea, and prevent diversion towards non-farm activities like melamine production and to neighbouring countries like Nepal and Bangladesh.
“Neem coating, rationalisation in packaging from 50-kg bags to 45-kg bags and reviving idle production plants along with new capacity addition would make India self-sufficient in fertilisers till 2022,” Dharam Pal, joint secretary at the department of fertilisers, told Business Standard.
Pilot evidence makes the proliferation of neem-coated urea and reduction in soil application a distant dream. A study by the Bengaluru-based Institute for Social and Economic Change is telling. A majority of paddy farmers in the study noted an improvement in soil health and the quality of grains, while more than 80 per cent pigeon pea farmers noticed no change. The value of output rose by 10 per cent in the case of paddy but dropped 4 per cent in the case of pigeon pea, the report said. Further, the cost of ‘other’ fertilisers shot up 15 per cent for paddy and 50 per cent for pigeon pea when neem-coated urea was used in place of normal urea.
“Unless the farmer is not charged extra for additional urea used or there is an incentive for him for not using urea, there is no distinct chance of any big drop in consumption,” the industry official remarked. There is still no definite agronomical data to prove the effectiveness of neem coating and the results today are very raw, another private player said. DBT reform in fertilisers is expected to save another 3.5 MT of fertiliser annually, A Vellayan, chairman of the Chennai-based Murugappa group, told in an interview to The Hindu.
About 130,000 point of sale (PoS) machines have been deployed with fertiliser retailers in 14 states — where DBT has gone live — against a nationwide need of more than 200,000 machines till March 2018.
“Calling fertiliser DBT DBT is a misnomer since subsidy is still being transferred to producing companies and not the consumer,” a marketing head of a leading fertiliser producing company told Business Standard.
“If Aadhaar authentication fails, machines become idle, then there is a stability issue in the application software designed for the purpose,” he added. Fertiliser movement — from company to wholesaler to retailer to consumer — has become cumbersome at the retailer to consumer end after the introduction of DBT, notes a pilot study of Aadhaar-enabled fertiliser distribution system (AeFDS) by a MicroSave, a consulting firm, on government's directions.
The pilot study carried out at 200 retailer outlets in six districts found that 88 per cent farmers were unaware of producing Aadhaar, while only 35 per cent biometric authentications were successful at fertiliser retailers at first attempt.
DBT-enabled AeFDS is not capable of handling peak traffic of 300-500 farmers per day during the cultivating seasons. As a result, retailers would resort to “adjusted transactions”, meaning someone else would authenticate for the buyer, creating grounds for leakages again. In one case, an auto-rickshaw driver authenticated for a farmer as an “adjusted transaction”.
Many retailers have not registered themselves in the mobile fertiliser management system (MFMS), showing that “retailers relying on pilferage might have left the system because of increased accountability and transparency”, notes the study.
“In the case of fertilisers, the beneficiary could be a major cultivator farmer, or a tenant farmer. Beneficiary and entitlement according to the crop and land holding is difficult to define at this moment,” Dharam Pal said.