India Pharma Industry Faces Raw Material Crunch as Government Restricts Ammonia Supply

New Delhi: India's pharmaceutical industry faces a potential raw material crunch after the department of fertilizers issued an advisory restricting the sale of surplus ammonia to the fertiliser sector. The move has raised concern among drugmakers that rely on ammonia as a key input in the production of a wide range of medicines and active pharmaceutical ingredients (APIs).

Industry executives said the directive, if implemented in its current form, could disrupt domestic production, lead to medicine shortages and affect India's export commitments. Pharma cos may face shortage of the key input as the directive restricts sale of surplus ammonia to fertiliser cos.

Namit Joshi, chairman of Pharmexcil, said the diversion of ammonia to the fertiliser sector is a concern. "It will lead to shortages in pharma," he said. "We will seek clarification on this advisory."

The order follows a gazette notification issued by the ministry of petroleum and natural gas on March 9, which requires that natural gas supplied to fertiliser plants be used only for fertiliser production and not diverted. "All urea manufacturing units are directed that its sale must be strictly for fertiliser production in compliance with the Natural Gas (Supply Regulation) Order, 2026. Its sale must be prioritised to P&K/NPK manufacturers of subsidised fertilisers at reasonable price," the advisory said.

The advisory came after reports that some urea units had issued open tenders to sell ammonia outside the fertiliser sector, while P&K producers faced shortages and high prices. An industry executive said the pharmaceutical sector depends heavily on ammonia for the synthesis of several APIs, intermediates and formulations. "This is going to hurt us badly," said a senior executive at a mid-sized API manufacturer, requesting anonymity. "We have been sourcing ammonia from urea plants for years. If that channel is shut down, we will have no immediate alternative."

Pharma exporters are particularly concerned that prolonged ammonia shortages could lead to production cuts, delays in order fulfilment and strain long-standing relationships with overseas buyers. "Any disruption at the input stage can have a cascading effect down the supply chain," added another executive.