Urea import costs ease as India's fertiliser subsidy bill pressure set to ease

New Delhi: India's latest tender for urea is likely to fetch the most consumed soil nutrient at a much lesser price than the pre-war times, industry executives aware of the matter said.

Rashtriya Chemicals and Fertilizers (RCF), a state run producer and importer, is seeking to import 1.7 million tonnes of urea, comprising 700,000 tonnes for East Coast India (ECI) and 1 million tonnes for West Coast India (WCI), with shipment required by September 24. It has received bids in the range of $ 390-431 per tonne from 30 bidders. In its earlier bid in June, the price proposals were in the range of $ 444-605 per tonne.

Also read: India urea import offers decline 12% as war supply squeeze eases


In its first tender after the West Asia crisis, India purchased urea at $959 per tonne. This will be relief to soaring fertiliser subsidy bills expected to cross the budgeted target of ₹1.77 lakh crore and touch even Rs 3 lakh crore, according to some estimates.

While India has already procured around 40% of its annual imports of urea at double the pre-crisis price, further purchases will come at lower rates. Urea prices in the global market saw a notable decline in May after the initial surge immediately after the West Asia crisis broke out in February.

As prices skyrocketed, several importing countries resisted purchases, switching to cheaper alternatives of nitrogen fertilisers that stabilised the demand for urea.

Urea is the most-used soil nutrient in India, accounting for 45% of fertiliser consumption. It is applied right after planting, around the end of June. India is also the world's largest urea importer and sells it to its farmers at nearly 90% subsidised rates.