The Indian fertiliser ministry has sought a 100% increase in the fertiliser subsidy budget for FY27, driven by the West Asia conflict that is pushing up global fertiliser prices and import costs, according to government sources cited by PTI. The Department of Fertilizers has approached the Finance Ministry seeking a doubling of the subsidy from the budgeted Rs 1.71 lakh crore for the current financial year.
Subsidy Demand Skyrockets
The move comes amid concerns that disruptions linked to the West Asia crisis could significantly increase the government's subsidy burden. Last month, a senior Department of Fertilizers official indicated that the fertiliser subsidy bill could cross Rs 3 lakh crore this fiscal if the disruptions persist, according to sources. However, the final subsidy requirement could moderate somewhat as domestic fertiliser production continues to rise.
Rising Prices and Supply Chain Risks
The government provides substantial subsidies on urea and phosphatic and potassic (P&K) fertilisers. Currently, neem-coated urea is sold at Rs 242 per 45-kg bag, while di-ammonium phosphate (DAP) is priced at Rs 1,350 per 50-kg bag. Sources noted that any prolonged disruption in shipping through the Strait of Hormuz would affect India's fertiliser import bill and make global procurement more challenging. International fertiliser prices are rising and the overall supply pool in global markets is shrinking.
Key concerns for policymakers, according to sources:
- Ensuring uninterrupted supplies through a complex tendering process.
- Managing the pace and scale of fertiliser price increases.
Domestic Production Gains
India has been increasing domestic output to reduce import dependence. In 2025, nearly 73% of the country's fertiliser requirement was met through domestic production, according to government sources. Total domestic fertiliser production, including urea, DAP, NPK and SSP, has increased from 433.29 lakh tonnes in 2021 to a record 524.62 lakh tonnes in 2025.
| Fertiliser Type | Production Increase |
|---|---|
| Urea (2014-15 to 2024-25) | 225 lakh tonnes → 306.67 lakh tonnes |
| Total (2021 to 2025) | 433.29 lakh tonnes → 524.62 lakh tonnes |
Despite the growth, India still imported more than 100 lakh tonnes of urea in the last financial year to bridge the demand gap.
Kharif Season Preparedness
Government sources maintained that adequate fertiliser stocks are available for the ongoing kharif sowing season. On Monday, Aparna S Sharma, Additional Secretary in the Union Ministry of Chemicals and Fertilizers, said: "For kharif 2026, the fertiliser requirement has been reassessed by the Department of Agriculture at 383.9 lakh tonnes and against this, the stock as on today is 197.56 lakh tonnes." The available stock is more than 51% of the kharif season requirement, significantly higher than the normal level of around 33%, she added.
Implications for Companies
For fertiliser companies operating in India, the subsidy allocation is a critical revenue driver. A doubled subsidy would provide financial breathing room for manufacturers and importers, but persistent supply chain risks from the West Asia crisis could pressure margins. The rising domestic production trend signals potential opportunities for local players, while import reliance remains a vulnerability. Investors should monitor the finance ministry's decision on the subsidy request and ongoing global price movements.
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