Nano fertilisers – will Indian farmers adapt?

29 Aug 2023 , 11:27 AM

The recently launched nano fertilisers (urea and DAP) have been in the limelight and should farmers adopt these products, the same are expected to reduce the government subsidy bill significantly. In this note, analysts of IIFL Capital Services discuss the selling proposition of these products, their likely impact on the government-subsidy expenditure and the changing industry dynamics. 

IFFCO’s nano-urea has foliar application: 

IFFCO has recommended that the nano-urea it launched last year be “sprayed” on plants for effective use. It claims that the product can help improve yields by up to 8%. However, adoption by the farmer has been a bit slow, as the job of mixing with water and then spraying across the field is labour intensive. 

Adoption of nano-DAP could be better than nano-urea: 

For the last five years, the average share of imports for urea and DAP stands at ~20% and ~40% respectively. Should the government be successful in replacing this demand with nano fertilisers, it could save ~Rs485bn in subsidy (at FY23 rates). However, adoption of nano fertilisers by farmers is slow. The nano-urea bottle is priced similar to the MRP of a conventional bag and provides little incentive for the farmer to switch products. Conversely, nano-DAP will provide greater incentive to the farmer – being priced at ~50% of the current MRP. 

Several capacities coming up: 

In addition to IFFCO, Meghmani Organics has also announced a capex of ~Rs1.5bn to set up a 50mn bottle plant for nano-urea. NFL and RCF have also tied up with IFFCO and intend to manufacture ~50mn bottles each by FY25. Additionally, Coromandel has recently launched nano DAP; Chambal Fertilisers continues to watch this space closely.