- The Ministry of Chemicals and Fertilisers seeks to double fertiliser subsidy to Rs 3.42 lakh crore for 2026-27
- India is one of the world's largest importers of DAP fertiliser and also relies heavily on imported LNG
- Global urea prices rose from $419 per tonne in December 2025 to $772 per tonne in April 2026
The Ministry of Chemicals and Fertilisers has approached the Ministry of Finance seeking a sharp increase in the fertiliser subsidy allocation for 2026-27, from the budgeted Rs 1.71 lakh crore to around Rs 3.42 lakh crore.
The move comes as global fertiliser and energy prices rise, increasing the cost of supplying fertilisers in India. However, the government is keen to shield farmers from higher prices, which means it may have to absorb a larger share of the cost through subsidies.
India has faced a similar situation before. The fertiliser subsidy stood at around Rs 71,000 crore in 2018-19. As global prices surged, the subsidy bill rose steadily and touched a record Rs 2.51 lakh crore in 2022-23 following the Russia-Ukraine war and disruptions in global supply chains. Although spending moderated later, it remained above Rs 1.7 lakh crore annually. Fresh geopolitical tensions in West Asia are now adding to concerns over another sharp increase.
Why Is The Subsidy Rising?
The biggest challenge is India's dependence on imports.
India is one of the world's largest importers of DAP fertiliser and also relies heavily on imported LNG, which is used to produce urea. Higher global fertiliser and energy prices raise the cost for domestic manufacturers and importers.
Since fertilisers are sold to farmers at subsidised rates, the government has to bridge the gap between market prices and retail prices, increasing the subsidy burden.
The pressure is already visible in international markets. Global urea prices rose from US $419 per tonne in December 2025 to US $772 per tonne in April 2026, an increase of more than 80 per cent. DAP prices climbed from US $682 per tonne to US $853 per tonne during the same period.
India's Import Dependence
India's reliance on imported fertilisers is also driven by the gap between domestic production and demand. Fertiliser production increased from 384 lakh metric tonnes in 2020-21 to 465 lakh metric tonnes in 2024-25. However, consumption of major fertilisers, including urea, DAP, MOP and NPKs, also grew from nearly 630 lakh metric tonnes to 656 lakh metric tonnes during the same period.
This leaves a gap of almost 190 lakh metric tonnes between domestic production and demand, forcing India to depend on imports.
As a result, any increase in global fertiliser prices or energy costs quickly feeds into India's subsidy bill. With international markets remaining volatile, the government's fertiliser subsidy burden could remain elevated as it seeks to protect farmers from rising input costs.
