India and Saudi Arabia Seal Five-Year Fertilizer Deal to Strengthen Agricultural Security

In mid-July 2025, during Indian Union Minister J. P. Nadda’s official visit to Saudi Arabia (Riyadh & Dammam) from July 11–13, India secured a major five-year Diammonium Phosphate (DAP) import agreement with Saudi mining giant Ma’aden.  Indian companies Indian Potash Ltd (IPL), KRIBHCO, and Coal India Ltd (CIL)/Coromandel International signed the agreement, effective from fiscal year 2025–26, with an annual supply of 3.1 million metric tones (MMT). This agreement also includes an option to extend for an additional five years, subject to mutual consent.

Why the Shift from China?

Supply disruptions from China: China, historically India’s primary DAP supplier, significantly reduced its phosphate exports to India—halting inspections and delaying consignments—leaving Indian stocks at unusually low levels (~1.56 MMT by early July).

Dependency risk: India imports roughly 60% of its fertilizer requirements annually (~10–11 MMT), making a steady supply chain vital for agriculture and food security

Key Features of the Agreement

Volume Supersedes Past Imports

This deal more than doubles previous annual imports from Saudi Arabia, which stood at 1.9 MMT during FY2024‑25—an increase of approximately 17% over FY2023‑24’s 1.6 MMT.

Expanding the Scope

While currently focused on DAP, both countries have expressed intent to diversify into other vital fertilizers like urea, and complex formulations such as NP/NPK, to strengthen long-term agricultural resilience.

Investment and R&D Collaboration

A joint working group has been established—led by the Indian Fertilizer Secretary and Saudi Vice‑Minister for Mining Affairs—to explore opportunities including:

1. • Indian public sector investments in Saudi fertilizer facilities,
   • Saudi investment in India’s agri-input sectors,
   • Collaborative research on India-specific customized fertilizers considering diverse agro‑climatic zones.

Site Visit and Strategic Talks

The Indian delegation toured Ma’aden’s state-of-the-art phosphate production facilities at Ras Al Khair, reinforcing real-time engagement with Saudi expertise and infrastructure High-level discussions took place between Nadda and Saudi Minister of Industry and Mineral Resources Bandar bin Ibrahim Al Khorayef, signaling deeper economic and industrial cooperation.

Strategic Implications for India

Fertilizer Security Strengthened: A stable, multi-year supply deal reduces vulnerability to geopolitical or trade disruptions.

Diversification of Source: Less reliance on China frees up negotiation leverage and stabilizes pricing dynamics amid global disruptions.

Innovation Trajectory: Joint R&D can help India develop tailored fertilizers that improve yields and soil health across varied regions.

Economic Diplomacy Intensified: The agreement reflects the deepening strategic partnership between India and Saudi Arabia—not just in energy but key input sectors like agri-inputs, chemicals, and pharmaceuticals.

Potential Challenges & Outlook

Scaling Up Logistics: Annual procurement of 3.1 MMT demands robust shipping and port infrastructure; price will remain market-linked (“spot‑priced”) ;

Dependence on Geopolitical Stability: While diversifying, India must continue exploring supply from other regions (e.g. Morocco, Jordan) to avoid over-reliance.

Need for Domestic Alternatives: Long-term resilience may eventually require boosting domestic production or local processing of phosphate rock.

Conclusion

This historic agreement—signed between July 11–13, 2025—secures a guaranteed annual supply of 3.1 million tones of DAP fertilizer for five years starting FY 2025–26, with potential for extension. Driven by supply shocks from China, the move marks a strategic diversification of India’s fertilizer sources. With investment, R&D collaboration, and potential expansion into urea and customized products, this pact is a cornerstone in strengthening India’s agricultural input security, resilience, and productivity.

Indian farmers, policymakers, and agri-industry stakeholders alike should see this as a game-changing initiative—one that underpins both food security and deeper bilateral ties with Saudi Arabia.