Nano fertilisers – Poised to provide relief for subsidy burden

What's Buzzing? 

After the launch of nano-urea, which was developed by Indian Farmers Fertiliser Cooperative (IFFCO) last year, the government is likely to make available nano-diammonium phosphate (nano-DAP), a variety of soil nutrient, to farmers by the 2023 Kharif season. Nano DAP has cleared biosafety and toxicity trials and is awaiting final approval for field use. 

Context 

Nano fertilisers increase soil fertility yield, quality parameters of the crop and are said to be nontoxic and less harmful to the environment and humans. Being nontoxic and harmless to health and natural biodiversity, these fertilisers would help cut the agriculture sector´s greenhouse gas emissions, to a considerable extent. Nano fertilisers are important to increase nutrient use efficiency and reduce excessive use of chemical fertilisers. The yield increase as a result of its use is estimated at anywhere between 3% and 16%, translating into an additional income of between Rs 2,400 and Rs 5,700 per acre for farmers. 

Our Perspective 

The fertiliser subsidy is expected to go up significantly this year to Rs 2.3 lakh crore, which was around Rs 1.62 lakh crore in the last fiscal. As per Annual Report of Department of Fertilisers 2021-22, India’s production of urea is ~ 26 MMT while import of urea is ~ 10 MMT. One 500 ml of Nano Urea is equivalent to one 50 kg bag of conventional urea. Also, the cost of Nano urea is marginally lower at Rs 240 per bottle compared to conventional urea cost post subsidy. Similarly, Nano DAP is expected to be priced at ~Rs 600 per bottle compared to conventional DAP of 50 kg costing Rs 1350 per bag post subsidy. For conventional urea, the government offers a discount of Rs 2000 per bag weighing 45 kg. By FY25, the government hopes to replace 20 million tonnes of traditional urea with nano urea, saving Rs 90,000 crore in fertiliser subsidies. Although it is early days, we believe the evolution of nano fertilisers has the potential to reduce the government’s subsidy burden.