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Fertiliser Limbo, Billion-Dollar Consequences
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Good Morning. India knows how to build fertiliser plants as it has done so before, and at scale. But it hasn’t seen new projects in more than five years as they have been stuck in policy limbo. Applications have been filed, but there’s no framework to clear them. The result is a rise in imports, swelling subsidy bills, and self-sufficiency drifting further out of reach for the sector, writes Dev Chandrasekhar. His column ‘The Plinth’ will be published every week on Thursday, where he will write about the intersections of India’s industrial ambitions meeting ground reality.
India’s equity indices ended on a muted note on Wednesday. The BSE Sensex closed at 84,233.64, losing 40.28 points or 0.05%. The NSE Nifty50 closed at 25,953.85, gaining 18.7 points or 0.07%.
In other news, India’s largest public lender, State Bank of India (SBI), beats IT giant Tata Consultancy Services (TCS) in market cap. Meanwhile, JSW Motors’ first car could be delayed over licenses to import from China.
With India's New Fertiliser Manufacturing Stuck in Policy Limbo, Imports Will Keep Rising
What
The applications exist. Industry sources confirm them. The Fertiliser Association of India references them. Parliamentary committees acknowledge them. But ask for specifics, and the trail goes cold.
Multiple applications from PSUs and private entities seeking approval to build fertiliser plants sit somewhere in the bureaucratic apparatus. What's missing: policy clarity. In its absence, even basic information about these projects remains non-public, trapped in the same limbo as the applications themselves.
The last fertiliser plant approval in the country came in March 2025 — Namrup-IV in Assam, a Rs 10,601 crore brownfield ammonia-urea complex with 12.7 lakh tonne capacity. Before that? Nothing since November 2022, when the Sindri plant commenced production. Thirty months of silence — no approvals, no movement — while the gap between domestic production and demand widens from 80 lakh tonnes to likely 100-120 lakh tonnes by decade's end.
Why So?
The New Investment Policy 2012 (NIP-2012), announced in January 2013 and amended in October 2014, successfully attracted investment and modernised India's urea sector. Six new plants were commissioned between 2019 and 2022 — four through PSU joint ventures, two from the private sector — bringing total domestic capacity from 207.54 to 283.74 lakh tonnes per annum.
The policy worked because it provided transparent subsidy calculations, clear concession periods, and the predictability that converts intent into commissioning schedules. All six plants were of 12.7 lakh tonnes per annum capacity.
This standardisation was likely intentional in the policy design. Creating uniform-capacity plants simplifies subsidy calculations, technology specifications, and performance benchmarking.
The New Investment Policy 2012 (NIP-2012) successfully incentivised major urea production through a predictable framework that rewarded efficiency, leading to the commissioning of landmark private and public sector plants.
While the policy’s 2014 sunset clause protected government-backed projects like the HURL units despite COVID-related delays, it effectively locked out private sector expansion after the five-year window closed in October 2019.
As a result, India has spent over five years without a formal approval policy, leaving all new private investment applications in a state of administrative limbo.
And it’s costing the country billions. India currently imports fertilisers worth $6-8 billion annually. Over a decade, that compounds to $60-80 billion flowing out — capital that could instead build domestic plants.
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Rs 10.92 lakh crore
That is the market capitalisation that SBI reached on Wednesday. This was after a post-earnings rally triggered by its highest-ever quarterly net profit of Rs 21,028 crore. SBI shares surged 3.4% to close at Rs 1,183, vaulting the lender over TCS to become India’s fourth-most valuable company. Notably, SBI is now the only public lender in the nation's top five valuation brackets.
Catch Up Quick: While SBI ascended, TCS saw its valuation slide to Rs 10.5 lakh crore as IT stocks faced sector-wide pressure. Reliance Industries remains the domestic leader at Rs 19.87 lakh crore, followed by HDFC Bank and Bharti Airtel.
Setup: In the primary market, the government’s Offer for Sale (OFS) of a 5% stake in BHEL saw robust investor appetite, ending Wednesday significantly oversubscribed. Despite the successful subscription, BHEL shares dropped 5.6% in secondary trading.
US-Bangladesh Tariff Reality
Bangladesh and the United States signed a trade deal on Tuesday, but Bangladesh’s gains are narrow and conditional, argues Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), cautioning that while the agreement offers headline tariff relief, its benefits are tightly tied to US sourcing requirements that may be difficult for Dhaka to meet at scale.
By The Numbers: A typical Bangladeshi garment facing a 12% US MFN tariff would now attract a 31% total duty (12% MFN plus 19% reciprocal), only slightly higher than India’s roughly 30%. Only garments using American fibres would avoid the additional 19%. “The zero-duty carrot is narrow and difficult to use at scale,” Srivastava said.
What's Next? In 2024, Bangladesh exported $50.9 billion in garments globally, with over 63% of the shipments going duty-free to the EU, while the US accounted for $7.4 billion. Its supply chains rely heavily on Asian inputs: of $16.1 billion in textile imports, China supplied $9 billion and India $3.1 billion, compared with just $274 million from the US. Reworking this structure, Srivastava cautions, would be costly and complex.
Russia Courts Indian Labour
Russia’s deepening labour crisis—marked by a shortfall of 2.3 million workers—has triggered a strategic pivot toward India to sustain its wartime economy. Following a mobility agreement signed by Russia and India in December 2025, work permits for Indian nationals surged from 5,000 in 2021 to nearly 72,000 in early 2026.
Overview: Indian migrants, often earning upwards of 100,000 rubles ($1,300) per month in cities like St. Petersburg, are filling roles ranging from textile sewing to snow removal. Russian recruiters have even established training centres in Indian cities to bypass language barriers and prepare workers for heavy industrial roles.
Flashpoint: Geopolitical pressures now threaten this labour pipeline. As US officials monitor India’s energy recalibration, the oil-for-labour synergy — where Russia used accumulated rupees to pay Indian workers — may become economically unviable.
China Curbs Hit JSW
JSW Motors, part of Sajjan Jindal’s JSW Group, has warned that the launch of its first car could be delayed unless India fast-tracks approvals for importing components from China, Reuters reported. The company, which is investing $3 billion in hybrid and electric vehicles in Maharashtra, plans to initially rely on imported parts while building a local supply chain.
The Lead: In a December 2025 letter to the Ministry of Heavy Industries, JSW urged quicker certification for Chinese suppliers of safety glass, including windshields and sunroofs, saying such components are not readily available from Indian vendors. India’s quality control rules, introduced in 2020, require overseas suppliers to obtain local certification before shipping goods.
The Shift: The ministry has yet to respond. JSW is exploring suppliers in Germany and Vietnam, though that would raise costs. The company is also in talks with China’s Chery for a technology partnership and holds a stake in JSW MG Motor India.
Crude Awakening
India has asked state-owned refiners to increase purchases of crude oil from the United States and Venezuela as it seeks to diversify away from heavy Russian supply, industry executives told Bloomberg.
Catch Up Quick: The push follows a US-India interim trade deal that features tariff cuts on Indian goods and encourages energy cooperation, but New Delhi has not publicly pledged to end Russian oil imports.
Future: Traders say state refiners and private players are already booking Venezuelan cargoes for delivery later this year, even as India balances cost and geopolitical pressures. New Delhi insists energy security remains paramount and that diversification will depend on commercial merits and refinery compatibility rather than political commitments alone.
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Financials Are Powering The Benchmarks As Markets Stay Flat
On Episode 796 of The Core Report, financial journalist Govindraj Ethiraj talks to Prabhu Dhamodharan, Convenor of the Indian Texpreneurs Federation as well as Priyam Gandhi-Mody, Executive Director, Future Economic Cooperation Council (FECC).
Financials are powering the benchmarks as markets stay flat
Indigo says it has complied with norms it was supposed to in December
Indian negotiators score fresh wins in evolving India-US tariff deal
A deep dive into cotton economics behind the Bangladesh reciprocal deal for garment exporters and the India connect
Not just Delhi, Mumbai has several interesting conferences lined up next week too
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