Fertiliser Ministry Aims to Double FY27 Subsidy Allocation to Rs 1.71 Lakh Crore
The Indian fertiliser ministry has requested a 100% increase in the fertiliser subsidy budget for FY27, driven by rising global fertiliser prices amid the ongoing conflict in West Asia. The Department of Fertilizers has approached the Finance Ministry to double the subsidy from the current budgeted amount of Rs 1.71 lakh crore. Concerns are growing that disruptions related to the West Asia crisis could significantly elevate the government’s subsidy burden.
The fertiliser subsidy bill could exceed Rs 3 lakh crore this fiscal year if disruptions continue, according to a senior official from the Department of Fertilizers. However, the final subsidy requirement may be moderated as domestic fertiliser production is on the rise. The government currently provides substantial subsidies on urea and phosphatic and potassic (P&K) fertilisers, with neem-coated urea priced at Rs 242 per 45-kg bag and di-ammonium phosphate (DAP) at Rs 1,350 per 50-kg bag.
Sources indicate that prolonged disruptions in shipping through the Strait of Hormuz could impact India’s fertiliser import bill and complicate global procurement. International fertiliser prices are increasing, and the overall supply pool in global markets is shrinking. Policymakers face two main challenges: ensuring uninterrupted supplies through a complex tendering process and managing the pace and scale of fertiliser price increases.
Despite these challenges, government sources assert that there are adequate fertiliser stocks for the ongoing kharif sowing season. Aparna S Sharma, Additional Secretary in the Union Ministry of Chemicals and Fertilizers, stated that the fertiliser requirement for kharif 2026 has been reassessed at 383.9 lakh tonnes, with current stocks at 197.56 lakh tonnes, representing over 51% of the requirement. This is significantly higher than the normal level of around 33%.
India has been working to increase domestic output to reduce reliance on imports. In 2025, nearly 73% of the country’s fertiliser requirement was met through domestic production. However, India continues to import substantial quantities of urea and DAP to satisfy local demand. Total domestic fertiliser production rose from 433.29 lakh tonnes in 2021 to a record 524.62 lakh tonnes in 2025. Urea production increased from 225 lakh tonnes in 2014-15 to 306.67 lakh tonnes in 2024-25, yet India imported over 100 lakh tonnes of urea in the last financial year to bridge the demand gap.
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