Salt Production Challenges in India: Weather Woes and Global Demand

India is the third largest salt producer in the world, trailing behind China and the United States (US). India's salt industry faces several challenges to produce salt and meet the market demand. Extended periods of unseasonal rainfall have not just hampered crops but also affected salt production in Gujarat, accounting for 78% of all salt produced in India. The growing concern among salt manufacturers revolves around the rising demand for salt - both industrial salt and food use - while unfavorable weather has disrupted the production of Indian salt this year.

Salt production in India taps into diverse resources, including sea brine, lake brine, subsoil brine, and rock salt deposits. Gujarat is the largest salt-producing salt in India, followed by Rajasthan, Tamil Nadu, Andhra Pradesh, and Maharashtra. In Gujarat, much of the salt comes from inland lakes and marine sources, using the solar-evaporation process from the high salinity of the Arabian Sea.

During the peak salt harvesting window, spanning from Mar-23 to May-23, Gujarat has encountered unseasonal rainfall, severely disrupting production in most parts of the state, including coastal areas of Saurashtra and Kharaghoda in the Little Rann. The state received 30.5 millimeters (mm) of rainfall against the normal of 1.7 mm from Mar-23 to mid-May-23, which was 30 times more compared to the same period the previous year. Consequently, the production of Indian salt in Marketing Year (MY) 2022/23 is forecasted to reduce by 20% year-on-year (YoY) to 182.12 lakh metric tons (mt).

Source: Indian Salt Manufacturers Association (ISMA)

In India's overall salt production, 70% is attributed to industrial salt, while the remaining 30% is for food use. Industrial applications encompass crucial chemicals like caustic soda, soda ash, and chlorine, while edible salt varieties include iodized salt, double-fortified salt, low-sodium salt, and Himalayan/rock salt. Both Indian edible salt and those used in chemical industries find their way to international markets. Given the bleak production outlook for Indian salt, meeting the demands of the domestic and global markets poses a significant challenge.

India has been a notable player in global salt exports, with a substantial 56% YoY increase in export volume to reach 13.3 million metric tons (mmt) in 2022. The biggest Indian salt market destination is China, which imported 5.6 mmt, a staggering 195% YoY increase in 2022. Despite China being the world's largest salt producer, it still imports a huge quantity of salt from India for reserves and re-exporting to other Asia Pacific markets.

In the Chinese market, online retailers in parts of China ran out of salt in Aug-23 after Japan began discharging treated radioactive wastewater from the wrecked Fukushima nuclear power plant to the Pacific Ocean, causing a buying frenzy among anxious consumers. Some table salt brands were sold out on online food delivery sites in parts of Beijing and Shanghai. The Chinese government assured that China had sufficient salt reserves, and tests showed locally produced sea salt is safe. However, it's feasible that China would eventually expand salt imports if consumers continue to hoard salt. Other international markets, such as South Korea, may also possibly seek alternative salt suppliers.

Source: Trademap

Between Jan-23 and Jun-23, India exported 7.3 mmt of table salt, marking a substantial 32% YoY increase. The surge can be attributed to a robust international demand and increasing purchasing sales driven by this demand. Given the production forecasts downfall of 20% YoY in MY 2022/23, it is expected that Indian salt exports will gradually decrease by the end of 2023 in the hopes that the government will introduce export limit regulations similar to those that went into effect for sugar in 2022 to stabilize the domestic supply. Simultaneously, India needs to enhance the sustainability of its salt production by improving productivity, including diversifying salt production areas and intensifying research efforts for climate-resilient salt production.