To revolutionize the fertilizer industry, India is aiming to advance and expand as never before in 2023-24. The Production of 314.09 LMT of record urea, coupled with the promotion of nano fertilizers, SCU/Urea Gold (Sulphur Coated Urea), and high-efficiency DAP, sets the stage for advances that will benefit a multitude of startups.
According to the 2023-24 ‘Department of Fertilizers’ report, the 176.95 LMT DAP, MOP, and Rock Phosphate imports were critical dependencies. This, in turn, indicates rising import substitution as well as novel prospects in manufacturing targeting the exports.
Snapshot of the Market: Fertilizers Other Than Urea.
July 2024: Nano DAP. Of the 1,015.28 bottles of Nano Urea generated, 800.72 were sold and 181.61 of Nano DAP were produced.
SCU: As of July 2024, Urea Gold produced by RCF amounted to 4,675MT.
DAP Demand: Production of DAP in India in 2023-2024 is estimated to be 42.97 LMT which is significantly less than the 55.67 LMT imports, indicating that domestic production severely lacks in meeting the requirements.
The anticipated impact of the policy push is validated by the implementation of the Advanced Fertilizers MDA Scheme along with the integration of the Namo Drone Didi for Campaign PMKSK.
The country has been functioning under a demand and subsidy supported market of USD 800 million which provides a boon to new entrepreneurs and innovative ideas.
Why These Segments are Critical to New Startups
Market Support: Nano Urea and Nano DAP are eligible for sub FCO regulations.
Low Competition with High Growth Potential: DAP products are low competitive quick win import driven opportunities.
Positive Eco Friendly Initiatives: Nano and coated fertilizers helps improve India’s green initiatives and improves the soil condition.
International Relations: Export opportunities are available under MoUs with Nepal, Bhutan and Sri Lanka.
Manufacturing Projects with Startup Models
Nano Fertilizers – The Flagship Opportunity
What it is: Nano fertilizers improve efficiency and lower waste by allowing nutrients to be delivered and absorbed at a molecular level.
Current Status:
There are 6 Nano Urea units with 27.62 crore bottles and by 2025, 5 units are due to become operational, 4 Nano DAP units are already operational, and 2 are under construction.
New Venture Opportunities
- Small scale production: region specific nano blends for niche crops.
- Contract manufacturing: supply specified lots to PSUs.
- R&D: new nano carriers, novel blister packaging, others.
Why It Works:
- Will comply with government policy.
- Lower transport costs.
Business Model Example:
Set up a Nano DAP micro unit in Rajasthan (it is phosphate-rich). Planning the capacity and equipment must refer to NPCS feasibility studies. Retail and drone service application of PMKSK retail outlets.
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SCU/Urea Gold – Premium but Still Developing
What It Is: SCU branded Urea Gold produced by RCF boosts the soil health and enhances nitrogen-use efficiency relative to the Neem-Coated Urea.
Current Status:
- By July 2024, the production target for SCU is aimed to hit 4,675 MT.
- The government supports scaling SCU in all regions.
Start-up Opportunities
- Gain licenses to coat SCU distributed in the regions, partnered with local SCU plant manufacturers for tech collaborations.
- Separately innovated in the sourcing and coating tech for sulphur raw material processing.
- Advanced the coating for SCU by specializing packs for the horticulture sector.
Why It Works:
- Farmers pay the high premium prices, knowing they will see a greater yield.
- Farmers will benefit from the innovation and energy-saving plants the government is supporting.
Business Model Example
A temple serves the religious needs of the local people but also operates a coffee shop serving the local community. The temple also sells coffee at a minimal price making it accessible for the people worshipping at the temple.
Read More: 35 Profitable Manufacturing Business Ideas for Startups
Bridging the Big Gap: DAP Manufacturing
What It Is. It is the second most used fertilizer in the country after urea. The production of DAP is however, extremely low.
Current Status:
- Domestic production: 42.97 LMT
- Imports: 55.67 LMT which is still greater than production
- Startup Opportunities: DAP Blending Units- Units that blend imported intermediates with domestic inputs
- Greener Substitutes: Organic phosphate-rich blends.
Why It Works
- There is a sustained demand with a ready gap in the supply
- Domestic production is low so it is more beneficial to sell at a higher price
- There is also potential to export to Bhutan and Nepal.
Business Model Example
A DAP blending plant is predicted to be built near the ports for quick access to exportable materials and also close to agricultural land for rapid local distribution. Export pipelines to South Asia would also be built alongside.
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Planned Programs and New Projects
Completion of 12 New Units of Nano Fertilizers by 2025
- Renovated Urea Plants: Sindri, Barauni, and Ramagundam
- MDA scheme: 1500 Rupees per subsidy per MT of marketable organic fertilizers
- PMKSK: 2.14 Retail network outlets upgraded to multi-commodity retail outlets
- Namo Drone Didi: 15,000 women skilling in drones spraying programs
Emergence of New Industries from these Initiatives. the Entry barriers have been eased to the logistics, drone, technology, and retail sectors
MSMEs Achievements in Partnership with the Top Industrial Players
- IFFCO: production of nano urea and later on supported in farmers’ education
- RCF: first to SCU and showed to the premium fertilizers prospects
- FAGMIL: expanded to Sri Lanka and showed the competitiveness of Indian exports
Exporting newly developed products with associated partners.
Important Government Sites
- Department of Fertilizers – fert.nic.in
- GOBARdhan Portal – gobardhan.co.in
- PMKSK – Updates available at Ministry of Agriculture and Farmers Welfare.
- SATAT initiative – mopng.gov.in
Business for Beginners
- Integrated nano fertiliser and drone service – nano fertilisers and drone spraying bundling service.
- Regional SCU plants – source sulphur from refineries and urea coated for premium markets.
- Exportable DAP Blend – blend surplus intermediate imports and export.
- Retail Franchise for PMKSK – multi-crop fertilizers, soil tests, and agri-inputs and services in one point.
- Waste Circular Units to Bio-fertilizer – bio-fertilizers linked with SATAT for biogas and waste.
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Action Plan
Select One of The Following Segments: Nano, SCU or DAP.
- Harness The Grants: Apply for MDA, PMKSK, or other such schemes.
- Secure The Supplies: Tie-up with Refineries, CBG plants or overseas suppliers.
- Collaborate With NPCS: Use specific DPRs for Finance and other operational modeling.
- Create A Distribution Network: Integrate with PMKSKs and other digital agri-platforms.
- Technology Driven Expansion: Drones, soil testing, and digital systems.
- Focus On International: Export to Nepal, Bhutan and Sri Lanka right away.
The NPCS Advantage for Fertilizer Startups
At Niir Project Consultancy Services (NPCS), we offer comprehensive consultancy to enable startups to enter the fertilizer segment with certainty. We provide detailed manufacturing process design, market research, demand analysis, and process flow diagrams.
We also advise on product mix and capacity planning, machinery and raw material procurement, and furnish detailed financial projections and profitability analysis.
In the fertilizer sector, NPCS provides invaluable counsel on energy-efficient production, subsidy identification, and optimal plant location, enabling startups to effectively reduce risks, avail government support, and scale operations for domestic and export markets.
Find the Best Idea for Yourself With our Startup Selector Tool
Manufacturing Business: Conclusion
India’s fertilizer future sustainable and innovative. Nano Fertilizers, Sulphur-Coated Urea, and high-efficiency DAP are the next significant advancements. Entrepreneurs have a unique opportunity to enter the sector due to government support, evident market gaps, and export demand.
Startups are able to de-risk, gain investor attention, and scale profitably NPCS and make a positive impact on the country’s food security, soil health, and sustainable farming.
Manufacturing Business: FAQS
Q1: What is the minimum investment required to start a fertilizer manufacturing unit?
The investment depends on the scale and the segment. A small to medium Nano Urea or DAP blending unit would need about INR 2 – 5 crore. For a full-scale SCU or DAP unit, the required amount changes based on the capacity, machinery and location. Hence it would need more capital.
Q2: What are the critical raw materials and how may we procure them?
Urea, phosphoric acid, ammonia, sulphur and nano carriers are the key raw materials. Startups can procure raw materials first from the domestic suppliers. Otherwise it may import intermediates which can be blended, or can partner with refineries and CBG plants for byproduct sulphur.
Q3: How about government support to the new fertilizer ventures?
There are many ways a government can support such new ventures. For instance, a MDA (Market Development Assistance), PMKSK (Prime Minister Krishi Samriddhi Kendras), and subsidizing organic fertilizers give financial and Market Development Assistance to the new ventures.
Q4: What are the possible ways for the new ventures to easily distribute fertilizers?
The entrepreneurs can take advantage of the PMKSK centers, farmer producer organizations (FPOs), private dealers and the digital agricultural platforms. They can also increase the adoption of their products by combining them with other services for example, drone spraying or soil testing.
Q5: Does advanced fertilizers have potential to be exported?
Certainly, Indian signed MoUs with Nepal, Bhutan, and Sri Lanka for the supply of fertilizers. Startups producing Nano Fertilizers, SCU, or DAP can target these South Asian markets to create both the revenue domestics and international.
