A parliamentary panel on fertilisers on disinvestment of PSUs has found the finance ministry’s decision to classify the fertiliser sector as ‘non-strategic’ as ‘incongruent’ with the government’s Atma Nirbhar Bharat agenda.
Non-Strategic Status vs. National Interest
The standing committee on chemicals and fertilizers in its report tabled in Parliament has called for sustained investment in fertilizer PSUs will not only enhance self-reliance, but also safeguard national interests in times of global supply disruptions.
The department of investment and public asset management (DIPAM) of the finance ministry had turned down fertiliser ministry’s requests in the last several years on granting strategic status to the sector because of its role in ensuring food security.
Under the framework of the new public sector enterprise policy for Atmanirbhar Bharat in 2021, the fertilizer sector was categorized as a non-strategic sector, making it eligible for privatization or closure. However there has been no progress in terms of disinvestements of the seven PSUs manufacturing fertilizers
Stating that there are many private fertilizer manufacturers in the country, DIPAM had stated that seven central public sector enterprises including listed National Fertilizers (NFL), Rashtriya Chemicals & Fertilizers, Fertilizers and Chemicals Travancore (FACT) and Madras Fertilizers contribute only 25% and 11% of the country’s urea and non-urea fertilizer production respectively.
“Many (units) operate at a loss and that their continued existence is inconsistent with fiscal prudence or meet the criteria applied for strategic sector classification.,” the panel stated in its report.
According to the ministry of fertilizers, in FY25, out of the total 38.79 million tonne (MT) of urea consumption, 5.6 MT was met through imports. In case of non-urea fertilizers such as diammonium phosphate (DAP), NPK (nitrogen, phosphorus, and potassium) and muriate of potash (MOP DAP, imports were 10.38 MT against the consumption of 21.12 MT.
Contrary to the finance ministry’s claim, several fertilizer PSUs have shown remarkable turnaround, the parliamentary committee has noted. It stated that enterprise such as FACT, which has transitioned from a loss-making entity to a consistently profitable enterprise while the revival of closed units at Gorakhpur, Sindri, Barauni (of Hindustan Urvarak) and Ramagundam Fertilizers & Chemicals through CPSE-led joint ventures, has added over 7.62 million tonne (MT) to country’s annual urea production capacity.
Crucial link to food sovereignty
The committed noted that with the rising global prices and India’s continued reliance on imports for over 90% of its potash and phosphate needs , the sustained operation and “strengthening of fertilizer PSUs is crucial—not only for domestic production but also for price stabilization, disaster resilience, and long term food sovereignty,”.
According to the committee, the country’s dependency on import at present is to the extent of 25% of the requirement of urea, 90% in case of phosphates – as raw material or finished fertilizers and 100% in case of potash.
The panel has suggested that there is a strong need to ensure that the existing fertilizer manufacturing units function profitably and to revive the closed units so as to bridge the gap between the demand and availability of fertilizers in the country.
The committee has suggested targeted ‘revitalizing fertilizer PSUs’ mission to support technology upgradation, product diversification, and sustainable practices.