Fertiliser subsidy may surpass budgeted estimates by Rs 70k cr

NEW DELHI: India's fertiliser subsidy could exceed the budgeted estimates by about Rs 70,000 crore this fiscal as the price of the world's most widely used phosphorus fertiliser di ammonium phosphate (DAP) surged after supply was disrupted by the West Asia conflict, according to internal projections of the department of expenditure.

These estimates peg the fertiliser subsidy bill at around Rs 2.40 lakh crore against Rs 1.71 lakh crore budgeted for the current fiscal year.

"We are still dependent on imports for fertilisers and high international prices, and the import cost will push the subsidy outgo by Rs 70,000 crore as per our own estimates," a senior official told ET, ruling out any increase in prices for farmers.


In April, the fertiliser ministry had projected an about 20% increase in the total subsidy for FY27.

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India imports over 80% of its DAP requirements and for urea domestic production covers only 30-35% of total demand. India is among top fertiliser importing countries in the world.

The official said the Centre is committed to ensure that there are sufficient fertiliser stocks, and available at affordable rates to farmers.

The government has scaled up imports to ensure adequate stocks ahead of the kharif sowing season for rice, maize, soy, and pulses.

The high subsidy outgo is due to both higher procurement volumes and jump in global prices and an increase in freight cost.

The FY27 budget estimated urea imports of 4.5 million tonne at $460 per tonne and DAP imports of 5.2 million tonne at $667 per tonne.

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The ongoing West Asia crisis has pushed up the international prices of urea and DAP, along with key raw materials, such as ammonia, sulphur, phosphoric acid and natural gas.

Since March 2026, urea prices have jumped 85% to $950/tonne, DAP rose by 30% to $900/tonne, ammonia prices are up 60% and sulphur prices dearer by 50%, a recent report by CareEdge Ratings said.

Experts say such a spike in price was seen in FY23, during the Ukraine crisis, when fertiliser subsidy touched ?2.54 lakh crore.

India has imported 19.94 lakh tonnes of soil nutrients including urea, DAP, NPK, since the beginning of the crisis.

Indian Potash Ltd recently contracted 1.35 million tonne of DAP at $930-$935 per tonne for delivery to India's east and west coasts. This purchase, roughly a quarter of India's annual DAP imports, was primarily sourced from Saudi Arabia, Russia Egypt and Morocco.