India has signed long-term deals for the procurement of green ammonia for fertiliser manufacturing. The decision has been taken with the objective of reducing dependence on imported material for fertilisers. The news has been announced officially. As per reports, fertiliser plants have signed deals with producers of green ammonia for the procurement of the material for fertiliser manufacturing under the National Green Hydrogen Mission.

The deals for the procurement of green ammonia have been signed for the supply of about 7.24 lakh tonnes of the material annually. The deals will be effective for a period of 10 years. The decision has been taken with the objective of replacing the imported material known as ‘grey ammonia’, which is used for the production of phosphatic and potassic fertilisers. The production of these fertilisers is about 165 to 170 lakh metric tonnes annually in India. The country is highly dependent on imported material for fertilisers.

India produces around 165-170 lakh metric tonnes of such fertilisers every year, but still largely depends on imports of ammonia. The new agreements will address this issue by providing a stable supply of domestically sourced fertilisers at a fixed price.

The government believes that the shift towards green ammonia will result in a gain of around $2.5 billion in terms of forex in a decade due to reduced import requirements. The move will also reduce the carbon footprint of fertilisers, which currently rely on fossil fuel-based raw materials.

The new agreements were arranged through a competitive bidding process conducted by the Solar Energy Corporation of India under the Strategic Interventions for Green Hydrogen Transition program. The prices of green ammonia ranged between ₹49.75 and ₹64.74 per kg, which is much lower than international prices, according to government data.

It is a part of the government’s overall plan under the National Green Hydrogen Mission, which has an outlay of ₹19,744 crore and aims to achieve at least 5 million metric tonnes of green hydrogen production annually by 2030. Green ammonia, which is produced from renewable hydrogen, is likely to be at the heart of this transition as a feedstock for industries and a hydrogen carrier.

Various fertiliser companies and renewable energy developers are parties to this agreement, which covers several projects. These long-term deals are likely to provide stability to the fertiliser supply chain in the long term, which is expected to encourage investment in domestic production capacity.

Overall, this is a significant structural shift in India’s fertiliser supply chain, which is likely to connect the government’s energy transition targets with fertiliser production. Although this is likely to have a positive effect in the long term in terms of stability and reduced dependence on imports, the rate at which this is implemented and the cost competitiveness of green ammonia are likely to have a significant bearing on this in the long term.