While the Government carries out preliminary estimates of the Act on subsidies at the beginning of the financial year – based on sowing and irrigated areas and past demand – there is an implicit obligation to increase it to meet unforeseen circumstances.
“Fertilizers are expected to rise, which could require higher subsidies,” said the Cooperative LTD (IFCO), an official of the Indian farmer’s fertilizer. In the past, the government carries out special financial provisions for further subsidies in the event of an increase in global prices.
For estimating budget 2025-26 is the amount £1.68 trillion was assigned to the fertilizer subsidy. The center spent £1.71 trillion in FY25 and £1,88 trillion in FY24 for a subsidy.
The budget of the Ministry of Fertilizer is carried out on the basis of probable fertilizer consumption, natural gas prices – which are the main initial cost of fertilizer production – and the international price of finished fertilizer products that may vary from one year to another.
Imported
In the years 2024-25 India imported 4.97 million tonnes (MT) diammonium phosphate (DAP), which was more than half of what India consumes. Similarly, the country is fully dependent on imports for Muriate of Potash (MOP) for domestic consumption. The country brought 3.83 MT in 2024-25. India is also dependent on imports for 50% of its phosphoric acid needs. According to experts, the volatile global market, geopolitical restrictions and gas prices have to affect fertilizers.
According to Anand Kulkarni, Director, Crisil Ratings, India import 60% DAP and 15% of its urea requirements. Together these two make up 70% of the consumption of domestic fertilizers.
“In the middle of the export of fertilizer shortened in China during the fiscal year of 2025, India import DAP and urea from countries such as Saudi Arabia, SAE and Qatar, increased and were around 40-45%and 25-30%, respectively 25-30%and 25-30%respectively, respectively, in real question, The region that is in the region that is in direct countries.
Crisil is of the opinion that disruption of supplies from these countries to the overall market is likely to increase prices in the short term. In addition, the indirect impact of the increase in transport costs, the costs of transport and insurance can lead to inflation of initial prices, as many shipments of fertilizers pass through the Strait of Hormuz.
Crisil said that in the event of a permanent increase in international fertilizers as a result of an ongoing conflict, the Government subsidy law may increase. The government usually supports this industry through further subsidies to maintain fertilizer farmer gate prices under control.
“The cost of awarding public contracts for complex fertilizers, such as DAP, may increase due to significant imports and likely increase in international prices,” Anand said.
In the urea sector, the impact will be largely in the event of an increase in the prices of Brent Cude. The permanent increase in the prices of Brent SUROPCE over the existing range of $ 73-76 per barrel (BBL) is likely to increase the imported natural gas prices associated with Brent Crude.
In the fiscal year 2023, an increase in subsidy in the middle £2.5 trillion, added Anand.
E -mail sent to the Ministry of Chemicals and Fertilizers remains unanswered.
Monsoon
Indian consumption of fertilizers in the Kharif season, which was caused by a normal monsoon forecast, is estimated to increase by 5.5% to 36.26 MT compared to total sales in 2024-25. The total consumption is expected to demand urea at 18.54 MT, DAP 5.7mt and MOP 1,11MT.
“The urea of the Gulf of Arab is the main source of urea for India, which can be influenced due to ongoing tension. Earth like SAE, Qatar, Kuwait, Saudi Arabia, Oman, Iran and Egypt, almost 15-20mt urea and 3-4mt DAP for global markets. Yara South Asia, part of the Norwegian multinational nutrition company.
“While India has been diversifying its energy sources over the past few years, the potential disturbance of gas flows through Hormuz will potentially affect global prices – India may have to pay a higher price.”
According to him, urea and DAP prices can potentially see a significant jump. “If fertilizers and raw material prices increase significantly, it will be necessary to increase the fertilizer subsidy,” Kanwar said.
According to people who are involved in development, the government and industry closely cooperate on ensuring sufficient availability of the product for farmers.
(Tagstotranslate) fertilizer subsidies
