Recent tensions in West Asia have highlighted a key vulnerability in India’s fertilizer sector. India does not lack urea production capacity. What it lacks is control over the feedstock that powers it. Every spike in global gas prices reverberates through the farm economy.
India imported close to 27% of its urea needs and over 80% of the natural gas used for fertilizer production in 2025. When gas supplies tighten and costs rise, the government absorbs the shock through subsidies. In 2024–25 alone, the fertiliser subsidy bill crossed INR 1.71 lakh crore ($17.9 billion). This is not a one-time challenge but a structural weakness. The challenge lies at the heart of the production chain. Urea production depends on ammonia, and ammonia production depends on natural gas. Gas serves as both feedstock and fuel. As a result, disruptions in the Gulf can affect fertilizer economics in India within weeks. Farmers ultimately bear the consequences, whether through supply constraints or the fiscal burden of rising subsidy requirements. Addressing this challenge requires more than short-term measures; it requires rethinking how fertilizer is produced.
An integrated pathway for fertilizer self-reliance
The answer may not be found within the fertiliser sector alone. Co-locating agrivoltaics, maize cultivation, ethanol production, and urea manufacturing can create an integrated system in which energy, carbon, and agricultural outputs support one another.
At the farm level, agrivoltaics enables the dual use of land for crop cultivation and solar power generation. Farmers can grow maize under and around solar photovoltaic panels, generating income from both grain production and electricity generation. At the same time, they can reduce diesel consumption for irrigation and benefit from a more stable source of income.
Maize assumes a central role in this model. India already uses maize as a feedstock for ethanol production under its blending programme, which achieved its 2030 20% ethanol blending target in 2025. Each tonne of maize can produce approximately 400 litres of ethanol. Ethanol production capacity is expanding across states such as Bihar, Uttar Pradesh, Maharashtra, and Karnataka. However, ethanol plants also release substantial amounts of carbon dioxide (CO₂) during fermentation. For every litre of ethanol produced, around 0.8 kg of CO₂ is emitted, most of which is currently released into the atmosphere. Unlike conventional carbon capture systems that must separate CO₂ from diluted industrial exhaust streams, fermentation produces a concentrated stream of high-purity biogenic CO₂, making capture and utilisation comparatively straightforward. This CO₂ can instead become a valuable input. In a co-located cluster, biogenic CO₂ from ethanol plants can be supplied directly to nearby urea production facilities. Urea manufacturing requires CO₂, much of which currently originates from fossil-based processes linked to gas-derived ammonia. Substituting this with biogenic CO₂ can reduce emissions, lower dependence on imported inputs, and convert a waste stream into a productive resource.
Energy is the element that binds the system together. Electricity generated through agrivoltaics can power ethanol plants and support electrolyzers that produce green hydrogen. The hydrogen can then be used in ammonia synthesis. Combining green ammonia with captured CO₂ enables the production of low-carbon urea, reducing dependence on imported natural gas and shielding fertilizer production from global price volatility.
Importantly, such clusters need not rely solely on maize cultivated beneath agrivoltaic installations. Agrivoltaics can serve as an energy anchor for a wider regional ecosystem, with ethanol facilities procuring maize from surrounding farming communities. This not only supports larger-scale ethanol and fertilizer production but also creates a dependable market for farmers across the region. By generating sustained industrial demand for maize, the model can strengthen local value chains, provide farmers with an additional avenue to market their produce, and improve price realisation through greater market competition and diversified offtake opportunities.
Why the economics work
The economics of such a system are supported by multiple revenue streams. Ethanol production benefits from assured demand under government blending targets, while urea serves a domestic market exceeding 33 million tonnes annually. Electricity generated through agrivoltaics and consumed captively can reduce industrial power costs by approximately 35%–50%, depending on the state’s electricity tariff structure. It also provides assured and secure offtake for electricity generated by farmers adopting agrivoltaic systems.
Carbon markets can provide an additional source of revenue. Capturing CO₂, replacing fossil-based inputs, and using renewable electricity can generate verifiable emission reductions. These can potentially be monetized through voluntary carbon markets, improving overall project viability.
The benefits extend across stakeholders. Farmers gain income from both agricultural production and electricity generation while reducing input costs and improving income stability. Industry can reduce exposure to gas price fluctuations and diversify revenue opportunities. For the government, lower dependence on imported fertilizers and feedstock can reduce both import expenditure and subsidy pressures. Given the billions of dollars India spends annually on fertilizer imports, even partial substitution could yield meaningful fiscal savings.
The model also supports rural economic development. Rather than relying solely on large, centralized facilities, integrated clusters can emerge within maize-growing regions. These clusters can create employment across farming, processing, energy generation, manufacturing, and logistics while retaining greater value within local economies.
Towards Atmanirbharta in fertilizer production
Many of the building blocks already exist. The upcoming KUSUM 2.0 scheme is expected to support 10 GW of agrivoltaic installations across the country, while ethanol policies continue to stimulate demand for maize. What remains absent is a framework that links these components into a coherent system.
Creating that linkage will require coordinated action. States can identify suitable maize-growing regions for cluster development. Farmer producer organizations, self-help groups, and cooperatives can support aggregation and implementation. Standards for low-carbon urea can help create market signals and stimulate demand. Financing can draw on public support, private investment, green bonds, and carbon revenues to improve project economics and attract capital.
India has relied on imports and subsidies to secure fertilizer supplies, but this approach remains vulnerable to global price and supply shocks. Integrating agrivoltaics, bioethanol, and urea production offers a pathway towards Atmanirbharta in fertiliser production—one that begins not with imports but with resources already rooted in India’s fields.
Suhas Sathyakiran is a Senior Analyst in the Renewables team, while Saptak Ghosh heads the Renewables and Energy Conservation sector at the Center for Study of Science, Technology and Policy (CSTEP), a research-based think tank.
The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.
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