Beyond Urea: India’s DAP and MOP Crisis, the Subsidy Architecture, and What Decarbonisation Means for Non-Urea Fertilisers
India is effectively 100% dependent on imports for MOP and relies heavily on international markets for DAP. With Red Sea disruptions and sanctions driving DAP to $750–770/t CFR India and MOP to $350–400/t CFR India, the non-urea fertiliser subsidy bill has reached Rs 65,000–75,000 crore for FY2025-26. Unlike urea, there is no domestic production alternative at scale. The decarbonisation question for DAP is not solely feedstock substitution — it is supply chain sovereignty and managing embedded emissions in imported inputs.
Key Takeaways
- India’s fertiliser consumption is approximately 28 to 32 million tonnes of nutrients annually, covering three primary nutrient streams: nitrogen (N, primarily as urea), phosphate (P, primarily as DAP and single superphosphate), and potash (K, primarily as muriate of potash or MOP). India is highly self-sufficient in nitrogen capacity, but structurally import-dependent for phosphate and potash. It has modest domestic phosphate rock reserves but no economically viable domestic potash deposits, making the country effectively 100 percent dependent on MOP imports. For DAP, while finished product imports meet 50-60 percent of demand, the reliance on imported upstream materials (phosphoric acid, ammonia, and rock phosphate) means the effective value-chain dependence exceeds 80 percent.
- DAP (Diammonium Phosphate, (NH₄)₂HPO₄) is the most widely used complex fertiliser in India — approximately 10 to 12 million tonnes per year in consumption. DAP is produced from phosphoric acid and ammonia. For the standard 18-46-0 grade, ammonia accounts for approximately 26 percent of the molecule’s mass and often 35 to 50 percent of production costs. DAP’s CBAM coverage (EU Regulation 2023/956 Annex I, CN code 3105 30) includes the embedded emissions from both the phosphoric acid wet process and the ammonia inputs.
- MOP (Muriate of Potash, KCl) is a mined product. All MOP is imported, primarily from Canada (Nutrien), Russia/Belarus (Belaruskali, EuroChem), and Jordan (Arab Potash). Geopolitical supply shocks have tightened global availability — Red Sea shipping disruptions have affected Middle Eastern routes, while sanctions continue to constrain Russian and Belarusian trade. At $350 to 400/t CFR India, MOP is at an approximate 40 to 50 percent premium to its pre-crisis baseline. MOP is currently outside the scope of CBAM, though potash mining still carries embedded emissions from extraction, crushing, and transport.
- The Nutrient-Based Subsidy (NBS) scheme governs the fiscal architecture of non-urea fertiliser support. Under NBS, the government fixes the subsidy per kg of nutrient quarterly. At $750/t CFR India for imported DAP (plus inland logistics margins), the government’s total support must cover roughly 55 to 65 percent of the landed cost to keep retail prices affordable for farmers (maintained artificially around Rs 1,350 per 50 kg bag, or Rs 27,000/t). The fiscal gap between the NBS subsidy, farmer payments, and the soaring import cost has pushed the government’s total support bill to Rs 25,000 to 30,000 crore for DAP alone in FY2025-26.
- India’s domestic DAP production capacity is approximately 4 to 5 million tonnes per year. The finished product gap comes from Saudi Arabia (SABIC, Ma’aden), Morocco (OCP), China, and Russia. India’s DAP diversification strategy includes long-term supply MOUs with major producers like OCP and exploring new mining partnerships.
- The decarbonisation pathway for non-urea fertilisers is fundamentally different from urea. For DAP, the pathway requires substituting green ammonia for grey ammonia in the ammoniation step, and addressing the wet phosphoric acid process. The CO₂ in the phosphoric acid process primarily comes from carbonate impurities in the phosphate rock reacting with acid, alongside the energy used for concentration. MOP decarbonisation requires decarbonising mining operations (electrification), with limited near-term scope for major downstream emission reduction.
India’s fertiliser security debate has been heavily dominated by urea — the nitrogen fertiliser that India produces domestically in large volumes and sells at a government-mandated fixed price. The policy response for urea—domestic green ammonia integration and HPO acceleration—addresses a sector where India controls the means of production. But the import dependency crisis affecting DAP and MOP is structurally more severe, because both DAP (to a massive extent across its value chain) and MOP (completely) are irreplaceable imports that India cannot manufacture domestically at scale regardless of what technology transitions occur.
This structural distinction is the most important analytical point for understanding India’s long-term fertiliser security strategy. Urea security can theoretically be achieved through domestic green hydrogen production. DAP security requires either aggressive domestic phosphate rock development (India has reserves at Maton in Rajasthan and Uttarakhand, but of lower quality than Moroccan and Jordanian ore) plus sulfuric acid and green ammonia for the wet process, or a shift in India’s crop nutrition mix. MOP security has no domestic production alternative — India must diversify its supplier base geographically and build strategic reserves.
The CBAM exposure on DAP: A Question of Input Imports
DAP is covered under CBAM Annex I CN codes in the fertiliser category (specifically CN 3105 30). The embedded emissions of DAP include Scope 1 emissions from the ammonia synthesis (if grey ammonia is used), energy used to produce sulfuric acid, and the direct CO₂ released when carbonate impurities in phosphate rock react during the wet phosphoric acid process. However, because India requires 10 to 12 million tonnes of DAP to meet domestic demand, India does not export bulk DAP to the EU. The government heavily restricts exports of subsidised fertilisers to prevent diversion. Therefore, India’s direct CBAM liability on DAP exports to Europe is virtually zero in practical terms.
The real carbon exposure for India regarding DAP is indirect: if carbon border adjustments or upstream carbon taxes in supplier countries raise the cost of imported grey ammonia or phosphoric acid, domestic production costs will rise. Substituting imported grey ammonia with domestically produced green ammonia secures the supply chain and decarbonises the end product simultaneously.
India Fertiliser Sector — Non-Urea Import Profile and Decarbonisation Pathways · April 2026
| Fertiliser | India Import Volume | Crisis Price (CFR India) | Primary Suppliers | CBAM Coverage | Decarbonisation Pathway |
|---|---|---|---|---|---|
| DAP (CN 3105 30) | ~50-60% finished, >80% value chain | $750–770/t | Saudi Arabia, Morocco, China, Russia | Covered under 3105 30 (embedded emissions from ammonia + wet process) | Green ammonia substitution offers major reductions depending on plant LCA; process electrification. |
| MOP (CN 3104) | ~100% imported | $350–400/t | Canada, Russia/Belarus, Jordan | Currently outside CBAM scope (though mining carries emissions) | Mining electrification; strategic reserve building; supplier diversification. |
| Single Superphosphate (SSP) | Largely domestic | Linked to imported sulfur and phosphate rock | Domestic production at Udaipur, Jodhpur (Rajasthan phosphate rock) | Covered under 3103 (though bulk exports are restricted) | Domestic phosphate rock quality improvement; process electrification. |
| NPK complex | ~2–3 MMT/yr imported | Linked to DAP and MOP component prices | China, Russia, Europe | Covered under 3105 for N-P containing grades | Mixed: green ammonia for N component; no alternative for P and K components |
India’s strategic phosphate reserve and the Rajasthan phosphate rock question. India has estimated phosphate rock reserves of approximately 265 million tonnes at Maton, Jhamarkotra, and other Rajasthan deposits, plus smaller deposits in Uttarakhand and Madhya Pradesh. These reserves have historically been considered low-grade (18 to 22 percent P₂O₅ versus 28 to 33 percent for Moroccan ore) and economically marginal for large-scale DAP production. The geopolitical shipping crisis has changed this calculus: at $770/t imported DAP, the economics of beneficiating Rajasthan phosphate rock to 28 percent grade and producing domestic DAP could become economically viable for the first time in a decade. RSMML (Rajasthan State Mines and Minerals Ltd) and various domestic players are looking to accelerate domestic mine expansion. If this initiative scales, an optimistic scenario could see it adding 1 to 2 million tonnes of domestic DAP capacity by 2030. This is not decarbonisation — it is supply security. But powering this domestic production with green ammonia would simultaneously deliver supply chain sovereignty and massive emission reductions.
Frequently Asked Questions
What exactly does CBAM cover in DAP?
CBAM Annex I covers specific fertiliser products under Chapter 31 CN codes. DAP (diammonium phosphate) is covered under CN code 3105 30. The embedded emissions calculated under CBAM include the ammonia synthesis emissions (the ammoniation step) and the emissions generated during the wet phosphoric acid process (where acid reacts with carbonate impurities to release CO₂). MOP (3104) is currently outside the scope of CBAM. Because India restricts the export of subsidized bulk fertilisers to protect domestic farmers, India’s actual CBAM export liability on DAP is structurally negligible.
Is there any domestic alternative to MOP for India’s agricultural sector?
There is no domestic commercial potash deposit that can substitute for MOP at scale. The more strategically significant alternative to MOP is potassium recovery from organic waste streams — specifically from sugarcane bagasse ash and from agricultural residue burning. The Central Soil Salinity Research Institute has demonstrated that potassium-rich biochars from rice straw can reduce MOP application requirements on specific pilot plots by 20 to 30 percent, though this depends heavily on soil and crop agronomy. At scale, this is not a full substitute for MOP imports, but a meaningful reduction in import dependency that also addresses the stubble burning problem contributing to North India’s winter air pollution.
How does the Nutrient-Based Subsidy mechanism differ from the urea subsidy?
The urea subsidy fixes the retail price directly (e.g., Rs 242/266 per 45 kg bag) and pays the massive gap to producers and importers through direct reimbursements. The NBS scheme for DAP, MOP, SSP, and complex fertilisers provides a fixed per-kg subsidy on the nutrient content (N, P, K, S) rather than fixing the retail price entirely, though the government maintains heavy administrative influence over the final MRP to protect farmers. For CBAM purposes, neither subsidy mechanism affects the embedded emission calculation — CBAM assesses the carbon content of the product regardless of domestic fiscal support.
Sources
- Department of Fertilisers — Nutrient-Based Subsidy rates FY2025-26 — N, P, K, S per kg rates.
- IFA — World Fertilizer Trends and Outlook 2026 — DAP and MOP price data.
- Ministry of Chemicals and Fertilisers — India fertiliser import data and supplier diversification strategy March 2026.
- RSMML — Jhamarkotra phosphate mine expansion — capacity and grade data.
- European Commission — CBAM Regulation EU 2023/956 — Chapter 31 fertiliser coverage.
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