Copyright © HT Digital Streams Limit all rights reserved. For 2025-26 budget estimation, £ 1.68 trillion was assigned under fertilizer subsidy. Summary imports of fertilizer are a lifeline for agricultural production and the key to food security. India’s $ 1.68 billion fertilizer subsidy for the current financial year could rise if the crisis in Western Asia rises natural gas prices and delivery costs, even though farmers are the predictions of a good monsoon. While the government makes provisional estimates of the subsidy bill at the beginning of the financial year – based on sowing and irrigated area and demand in the past – there is an implicit commitment to scaling it up to comply with unforeseen circumstances. ‘Fertilizer prices are expected to rise, which could require higher subsidies,’ said an official at Indian Farmers Artis Cooperative Ltd (IFFCO). In the past, the government has made special financial provision for additional subsidies in the event of an increase in world prices. For the 2025-26 budget estimate, an amount of £ 1.68 trillion was allocated for the fertilizer subsidy. The center spent £ 1.71 trillion in FY25 and £ 1.88 trillion in FY24 on the subsidy. Read also | Lower rough prices can facilitate fiscal pressure in FY26. The budget estimate of the Department of Fertilizers is made based on the likely consumption of fertilizers, the price of natural gas – which is the most important input costs in fertilizer production – and the international price of completed fertilizer products, which can vary from one year to another. The import dependent in 2024-25 imported India 4.97 million tonnes (MT) diammonium phosphate (DAP), which was more than half of India. Similarly, the country is fully dependent on the import of Potash (MOP) for domestic consumption. The country imported 3.83 MT in 2024-25. India is also dependent on imports for 50% of its phosphoric acid needs. According to experts, a volatile global market, geopolitical restrictions and gas prices apply to fertilizer prices. According to Anand Kulkarni, director, Crisil Ratings, India imports 60% of DAP and 15% of its urea requirements. Together, these two form 70% of the consumption of fertilizer consumption. “The export of fertilizer exports cut by China during fiscal 2025 increased India’s imports of DAP and urea from countries such as Saudi Arabia, the UAE and Qatar and were about 40-45% and 25-30%, respectively during the fiscal 2025. Regional is influenced by the new trade routes or other countries, ‘says Anand. Fertilizer subsidy that is likely to remain steady in the FY26 budget, said that in the case of a sustained increase in the international prices of fertilizers due to the ongoing conflict, the government subsidy bill can increase the government typically via additional subsidies. rising as a result of significant import dependence and a probable increase in international prices, “says Anand. For the urea sector, the impact will be largely in the case of increases in Brent-Ru prices. Increase. An increase in subsidy has been seen in fiscal 2023 amid an unprecedented increase in raw material prices such as phosphoric acid and ammonia, which led to a historically high budget allocation of £ 2.5 billion, Anand added. Monsoon forecast is waved, the fertilizer consumption is estimated to rise by 5.5% to 36.26 MT compared to the total sales of 34.35 MT reported in 2024-25 Kharif season. Gulf is an important source of urea for India, which can be affected as a result of the ongoing tension. Countries such as the UAE, Qatar, Kuwait, Saudi Arabia, Oman, Iran and Egypt feed near 15-20 MT of urea and 3-4 MT of the global markets. For more than 20% of the global gas trade, said Sanjiv Kanwar, managing director, Yara South Asia, part of the Norwegian multinational crop nutrition business. Read also | FY25 Fertice subsidy is unlikely to be higher than the budgeted allocation “, while India has diversified its energy resources over the past few years, a possible disruption of gas flow via the street of hormuz may have an impact on world prices – India may have to pay a higher price.” According to him urea, DAP prices could possibly see a significant jump. “If the fertilizer and raw material prices rise significantly, there will be a need to increase the fertilizer subsidy,” Kanwar said. According to people who have the development of the development, the government and the industry work carefully to ensure adequate availability of the product for the farmers. Catch all the business news, Market News, the latest news updates on Live Mint. Download the Mint News app to get daily market updates.
Bill on Fertilizer subsidy is facing war shock
