Major respite for India on fertiliser front as urea prices finally fall

A correction in global urea prices last month has provided respite to India after the steep surge seen in May, although prices continue to remain signifiantly above year-ago levels, keeping pressure on the fertiliser subsidy bill, The Times of India reported on July 21.

According to government data, international urea prices stood at $572 per tonne in June, down around 40% from May levels, reflecting an easing in supply concerns. Even after the decline, prices were still 45% higher than the $395 per tonne recorded in June 2025.

The moderation comes at a crucial time as India enters the peak kharif sowing season, when demand for crop nutrients typically accelerates, ToI's report (by Dipak K Dash) said.


Industry executives attributed the fall in prices to an improvement in global supply conditions after China partially relaxed restrictions on urea exports and concerns over prolonged disruptions to shipping and energy supplies linked to geopolitical tensions in West Asia began to recede.

The decline is expected to reduce immediate pressure on fertiliser procurement costs, although uncertainty over global trade routes and energy markets continues to warrant close monitoring.

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It may be noted that India remains heavily dependent on imports to bridge its urea requirement despite sustained efforts to raise domestic production.

Government officials and industry participants indicated that domestic availability remains comfortable for the ongoing kharif season. Higher-than-target domestic production during May and June has strengthened inventories, reducing the risk of supply shortages even as consumption picks up across key agricultural states.

While urea prices have softened from their recent highs, the broader fertiliser market continues to face elevated input costs. The fertiliser department's June monthly bulletin showed that prices of several key raw materials and finished fertilisers remained above last year's levels.

Among the major inputs, sulphur registered the sharpest increase, with international prices reaching $1,050 per tonne, nearly 265% higher than a year earlier. Ammonia prices almost doubled from June 2025, rising 95% year-on-year. Prices of diammonium phosphate (DAP), muriate of potash and phosphoric acid also remained elevated, indicating that cost pressures persist across the nutrient basket.

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Higher global prices for phosphatic and potassic fertilisers are expected to keep subsidy requirements elevated. India imports almost all of its potash requirement and a substantial portion of phosphatic fertiliser raw materials, making domestic prices vulnerable to international market movements and currency fluctuations.

According to recent The Economic Times reports, the government has been closely tracking global fertiliser markets amid volatile energy prices and geopolitical developments. New Delhi has also been pursuing diversified sourcing strategies and encouraging higher domestic output to reduce import dependence and cushion farmers from global price shocks.

The easing in urea prices, coupled with stronger domestic production, provides near-term comfort for the Centre during the ongoing kharif season.

However, sustained volatility in global commodity markets and continued firmness in the prices of other fertiliser inputs suggest that the government's subsidy burden could remain substantial unless international prices stabilise further.