India is in its first government-to-government negotiations with Russia for the long-term supply of fertilizers, government and industry sources said, hedging against geopolitical instability and high global prices.
India is a top importer of urea and other soil nutrients needed to feed its huge agriculture sector, which employs about 60% of the country's workforce and accounts for 15% of $2.7 trillion economy.
Fertilisers Minister Mansukh Mandaviya along with officials from Indian fertilisers companies will visit Moscow later this month or early March to discuss the deals with Russian trade minister Denis Manturov, the government sources said.
This is the first time in 30 years that the Indian government will be involved in multi-year import negotiations for fertilizers. In 1992, India came out with a policy announcing deregulation of soil nutrients except urea.
The sources said India is aiming to lock in 1 million tonnes a year each of di-ammonium phosphate (DAP) and potash; and about 800,000 tonnes a year of a mix of nitrogen, phosphorus, potassium (NPK).
"Pricing and firm quantities are yet to be fixed ... Our focus is to have secure supplies at reasonable prices. Since the (Indian) minister is involved so we hope to get some discount," said one of the sources.
India's Rashtriya Chemicals and Fertilizers Ltd, National Fertilizers Ltd, Madras Fertilizers Ltd, Fertilisers And Chemicals Travancore and India Potash Ltd are expected to sign a 3-year deal for DAP, potash and complex fertilisers with Russian companies including Phosagro and Uralkali, the sources said.
Indian companies already have an import deal for 400,000 tonnes of DAP with Phosagro and they are expected to lift the entire contracted volumes by June, coinciding with end of the current export quota set by Moscow.
"We are currently in negotiations with our Indian colleagues to extend and develop our existing agreements for the supply of Phosagro's mineral fertilisers," Phosagro told Reuters. Uralkali declined to comment.
In 2021 some states in India faced shortages of fertilisers after export restrictions by China and a record surge in global prices, triggered by factors including high energy costs and Western sanctions against Belaruskali, the world's second-largest potash producer.
India allows companies to fix the retail price of fertilisers. But to ensure that farmers are not hit by a rally in global prices, New Delhi provides a subsidy to fertiliser companies to keep an indirect check on retail prices.
Indian companies and fertiliser ministry, and Russian trade ministry did not respond to Reuters request for comments.
An Indian fertilisers company official who negotiates overseas deals, said his firm is planning to sign an initial deal for long-term supplies from Russia.
"Fertiliser prices are rallying in global market. India is one of the biggest importers in the world and Russia is our key supplier. Our attempt is to insulate farmers from price volatility through long term supply contracts," he said.