In fact, the subsidy will probably be over 20% higher than the 1.77 lakh crore Rupees originally budgeted, potentially going over 2.12 lakh crore Rupees. This increase is because imports are more expensive, and energy costs are high. Both urea and Diammonium Phosphate are more expensive because of issues with shipping through the Strait of Hormuz. Also, liquefied natural gas (LNG) – which is a key part of making urea – has become more expensive, making it harder to plan for getting the fertiliser needed for the season.
Why the fertiliser subsidy is set to rise
A person at the fertiliser ministry says the amount of subsidy the government pays will likely go up by more than tousands of crore Rupees. Aparna Sharma, an additional secretary in the fertiliser department, is in frequent contact with the department that controls spending and will ask for more money if it’s needed. Since February, the price of urea and LNG have doubled.
Importantly, Sharma has stressed that farmers won’t pay more at the store. A 45kg bag of urea still costs 266.50 Rupees, even though it’s over 4,000 Rupees a bag globally. A 50kg bag of DAP is still 1,350 Rupees, the department says.
Government stance: protect farmers, hold prices
Currently, India has a good supply of fertiliser – 19.02 million tonnes, which is 49% of the 39 million tonnes needed for the kharif season. Normally, they’d have about a third of what’s needed at this point.
This current supply includes 7.1 million tonnes of urea, 2.23 million tonnes of DAP, 5.75 million tonnes of NPKs, 2.62 million tonnes of SSP and 1.24 million tonnes of muriate of potash. The ministry intends to import 6.4 million tonnes of urea and 1.9 million tonnes of other fertilisers for the kharif season. They ordered 1.3 million tonnes of urea in February 2026, and have approved another 2.5 million tonnes, using routes that avoid the Strait of Hormuz.
Officials outlined the following commitments:
– MRPs for urea and DAP will remain unchanged
– Subsidy support will be increased if required
– Adequate imports will ensure timely availability
– Farmer access and affordability will be protected
Supply readiness for kharif
They’ve increased the amount of gas available for urea factories to 97% (previously 60-65%) by buying extra gas on the open market, which allows them to make more. Since the problems in the Middle East began, urea factories in India have made 3.54 million tonnes of urea, adding to the amounts being imported.
Right now, there is plenty of urea (7.14 million tonnes when 2.05 million tonnes are needed) and DAP (2.3 million tonnes when 0.66 million tonnes are needed) available, which is good as the monsoon planting season gets closer.
Import plans and production
For 2027, 1.22 lakh crore Rupees has been set aside for urea subsidies and 54,000 crore Rupees for the nutrient-based subsidy system. Because of the price increases, these amounts will likely be increased to ensure farmers continue to pay the same maximum retail price (MRP).
So far this year, 13.11% of the 1.22 lakh crore Rupees for urea has been spent. The money is being spent gradually, as fertiliser is purchased, and the government is trying to balance having enough supplies with managing how much money they spend.
In 2025-26, the total cost of fertiliser subsidies was 2.17 lakh crore Rupees (1.42 lakh crore Rupees for urea and 74,999 crore Rupees for nutrient-based subsidy). This was a 29% increase on the original budget and shows how unstable global prices have been.
Budget allocations and past trends
In 2023, when there was conflict, fertiliser subsidies reached a record 2.54 lakh crore Rupees. Shipping through the Red Sea was disrupted during the Ukraine-Russia war, increasing both transport costs and the price of the nutrients themselves.
People in the trade say that if the conflict in the Middle East and the problems with shipping around Hormuz continue, the subsidy amount could go up even further. The fertiliser department will let the spending department know if they need more money.
To ensure there is enough fertiliser, Indian fertiliser companies put in a request on April 24th for 1.2 million tonnes of DAP, 0.4 million tonnes of TSP, and 0.3 million tonnes of ammonium sulphate. This combined order is to secure supplies when demand is at its highest.
The department has repeated that farmers won’t be affected by price changes around the world. The main aim is to make sure the supply doesn’t stop and that prices stay at the same level for farmers, even if the government has to pay a larger subsidy throughout 2027.
What to watch next
What happens in the near future will depend on the shipping situation around the Strait of Hormuz, the price of LNG, and the outcome of the requests for fertiliser. If shipping becomes easier and prices go down, the pressure on the subsidies might lessen. Right now, the most important thing is to be ready for the kharif season without increasing the financial strain on farmers.
