Amid an already mounting fertiliser subsidy burden due to the West Asia crisis, Finance Minister Nirmala Sitharaman on Saturday indicated that the government may keep retail fertiliser prices unchanged for farmers, as it did during Covid.
“Didn’t we do that during Covid? When fertiliser prices abroad shot through the roof, we still procured them at those prices and ensured there were no supply disruptions. Above all, prices were not passed on to farmers. Farmers paid the same price as before. We never shifted the burden to them,” Sitharaman said at an event organised by the Economic Times in Mumbai.
Since early March, global urea prices have risen from $460 per tonne to nearly $850 per tonne—an increase of about 85 per cent — while di-ammonium phosphate (DAP) prices have climbed 25–50 per cent to around $850–1,000 per tonne. Urea and DAP are the two most widely consumed fertilisers in India.
With fertiliser prices rising sharply due to the West Asia crisis, the Union Cabinet on Wednesday approved a 10–21 per cent increase in per-kg subsidy rates for non-urea fertilisers for kharif 2026 under the nutrient-based subsidy (NBS) regime, compared with kharif 2025.
The move is estimated to cost the exchequer about ₹41,534 crore, around 12 per cent more than the previous season.
West Asia accounts for 20–30 per cent of India’s urea requirement and 30 per cent of DAP imports, while supplying nearly half of the country’s LNG imports, a key feedstock for urea production.
Supplies of key raw materials such as ammonia, sulphur and sulphuric acid used in domestic production of phosphatic and potassic fertilisers have also been affected by the conflict.
India’s fertiliser subsidy for FY27 could come under pressure if global prices continue to rise, even though stocks are currently adequate to meet immediate demand, traders and market participants have said.
In the FY27 Union Budget, the government pegged fertiliser subsidy at ₹1.7 trillion, 8.4 per cent lower than the FY26 revised estimate of ₹1.86 trillion. The FY26 revised estimate itself was over 11 per cent higher than the budget estimate, reflecting record consumption of urea and DAP at elevated prices.
Data shows that by February 2026, fertiliser subsidy spending had already exceeded the FY26 revised estimate at ₹1.88 trillion.
Domestic production has also weakened. Urea output in March 2026 fell nearly 27 per cent year-on-year to around 1.8 million tonnes, while production of phosphatic and potassic fertilisers declined 16–24 per cent to about 0.9–1.0 million tonnes.
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