Domestic ammonium nitrate (AN) makers who have made large capex investments say they are facing a serious threat from the surge in imports of the key industrial input into the country, mainly from Russia. Already, a part of the domestic capacity has been frozen, they say.
AN is used in the fertiliser, mining, and defence sectors. The existing investments in the domestic AN capacity is around Rs 7,000-7,500 crore and an additional investment of Rs 5,000 crore has been lined up with plants under construction.
The current installed capacity in India is 10,96,000 tonnes per annum and an additional 10,19,000 tonnes per annum capacity is being built. The domestic AN capacity could go up to 20,70,000 tonnes by FY25-26 making India surplus in this product by 2025-26.
According to the Indian Ammonium Nitrate Manufacturers Association (IANMA), due to uncontrolled imports, capacity utilization has decreased from 86% in FY19 to 75% during April-December ‘23.
Almost 100% of the imported AN, in the last 18 months has come from Russia. Imports during the April-November ’23 period rose by 113% to 3,05,000 tonnes against 1,43,000 tonnes in the same period the prior year. The industry expects the full-year imports to exceed 4,00,000 tonnes compared to 3,56,000 tonnes imported in FY23.
There is a significant price difference between domestically manufactured AN and imported AN. The industry association wants AN import to be curbed and eventually stopped to allow these large-scale investments and additional capacities to come to fruition.
Alok Perti, director general, IANMA, has called for greater support for the domestic AN industry as additional AN capacities are being added through fresh capex investments running into thousands of crores to make the country self-reliant. However, the free flow of imports of AN and underutilization of domestic capacities undermined Make in India objectives.
Mahadhan AgriTech (formerly Smartchem and part of the Deepak Fertiliser Group), Gujarat Narmada Valley Fertilizers & Chemicals, Rashtriya Chemicals & Fertilizers and National Fertilizers are members of IANMA and account for the bulk of India’s AN manufacturing.
“Security and safety rules applicable for the domestic industry are not being uniformly applied to imported parcels,” Perti said. Manish Sinha, former executive director, Indian Oil Corporation, said it was important to secure the ammonium nitrate supply chain as around 95% of India’s imports go through the Vizag port, which is close to sensitive locations such as HPCL’s refinery, India’s Eastern Naval Command as well as the country’s strategic petroleum reserves so proper identification, traceability, and accountability was necessary.