India's complex fertiliser capacity to rise about 25% by FY29; credit profiles to stay stable: Crisil

India’s complex fertiliser manufacturing capacity is set to rise about 25% over the next three fiscal years, as producers respond to surging demand after seven years of minimal expansion, Crisil Ratings said on Wednesday.

The planned additions will lift capacity to around 20 million tonnes by fiscal 2029 from roughly 16 million tonnes now, helping contain the country’s dependence on imports, the rating agency said.

Capacity utilisation climbed to about 95% this fiscal due to negligible capacity addition in the past seven years.

Only about 0.5 million tonnes were added over the past seven years amid steadily rising demand.

“Healthy demand and limited capacity growth led to capacity utilisation reaching around 95% this fiscal,” said Anand Kulkarni, director at Crisil Ratings.

He said the upcoming capacity additions would help keep import dependence at 30–32%, which otherwise could have risen by 10–11 percentage points by fiscal 2029.

Crisil said manufacturers’ credit profiles will remain comfortable, supported by healthy profitability, improving backward integration and limited reliance on debt.

The government’s track record of timely subsidy disbursements is also helping companies manage working capital needs, it added.

Complex fertilisers account for nearly one-third of India’s total fertiliser consumption.

About a third of domestic requirements are met through imports, mainly di-ammonium phosphate (DAP), while nitrogen phosphorous potassium (NPK) fertilisers are largely produced locally, according to the report.

The share of NPK grades rose to about 60% in fiscal 2025 from an average 53% over the previous five years, as manufacturers prioritised NPK production due to better cost economics.

Crisil said execution risks were limited as most projects are brownfield expansions.

High import dependence also lowers offtake risks for new capacity.

Manufacturers are also adding sulphuric and phosphoric acid facilities, which is expected to lift backward integration to about 60% by fiscal 2029 from 50% in fiscal 2025.

“Producers are likely to invest 120–130 billion rupees over the next three fiscals,” said Nitin Bansal, associate director at Crisil Ratings.

He said most of the spending would be funded through internal accruals, keeping leverage largely stable at 2.0–2.2 times over the next two fiscal years.