India's complex fertilizer sector is gearing up for a significant capacity expansion, with projections indicating a rise of 4 million tonnes per annum (MTPA) by fiscal year 2029. This expansion is expected to boost the sector's utilization rate to an impressive 95%, thereby curbing the nation's reliance on fertilizer imports.
Investment and Funding
Fertilizer manufacturers are poised to invest an estimated ₹12,000-13,000 crore in this capacity expansion endeavor. A significant portion of this investment will be funded through internal accruals, ensuring comfortable credit profiles for the companies involved. This financial strategy underscores the sector's confidence and stability.
Backward Integration
The industry is also focusing on strengthening its backward integration, aiming to achieve a 60% level. This move is expected to stabilize profitability by securing raw material supply chains and reducing vulnerability to price fluctuations. Long-term raw material agreements and subsidy discipline further insulate production from global volatility.
Government Support and Policy
The government's proactive policies and support have been instrumental in driving the growth of the domestic fertilizer industry. Initiatives such as long-term supply agreements for key raw materials, strategic diversification of sources, and targeted support for expanding manufacturing capacity have collectively enhanced the resilience, capacity, and sustainability of the fertilizer industry. The effective implementation of the Nutrient Based Subsidy (NBS) policy has also played a crucial role, ensuring timely subsidy disbursements, providing manufacturers with financial predictability, and encouraging reinvestment in capacity expansion.
Impact on Self-Reliance
The expansion of complex fertilizer capacity aligns with the nation's "Aatmanirbhar Bharat" (self-reliant India) initiative. By boosting domestic production, India aims to reduce its dependence on fertilizer imports and enhance its food security. In 2025, approximately 73% of the country's fertilizer requirements were met through domestic manufacturing, a testament to the success of these efforts. The government is further promoting self-sufficiency through increased local production of nano urea.
Production Trends
India's fertilizer production has shown a consistent upward trend in recent years. Production increased steadily from 433.29 lakh tonnes in 2021 to an all-time high of 524.62 lakh tonnes in 2025. This growth reflects not only expanded capacity but also the revival of previously closed plants and the promotion of indigenous manufacturing capabilities. In January 2026, domestic production of phosphatic and potassic (P&K) fertilizers surged to a historic high of 15.76 lakh metric tonnes (LMT), marking the highest monthly output ever recorded.
Challenges and Future Outlook
Despite the positive developments, the fertilizer industry faces challenges such as fluctuating raw material prices, environmental concerns related to overuse of chemical fertilizers, and the need for infrastructure improvements in storage and distribution. Addressing these issues is crucial for ensuring the long-term sustainability and efficiency of the sector. Looking ahead, the Indian fertilizer market is projected to reach INR 1,433.6 billion by 2034, growing at a compound annual growth rate of 3.8% from 2026-2034. The industry's shift towards value-based strategies, with a focus on efficiency, robustness, and sustainability, will shape its future course.