Government May Maintain Retail Fertiliser Prices for Farmers Amid Rising Global Costs

Finance Minister Nirmala Sitharaman has signalled that the government may not pass on the rising fertiliser prices to farmers, despite the increasing global costs due to the West Asia crisis. This move aims to protect the farmers from the burden of rising fertiliser prices, similar to the approach taken during the Covid-19 pandemic.

Rising Global Fertiliser Prices

Global urea prices have risen sharply from $460 per tonne to nearly $850 per tonne, an increase of about 85 per cent, while di-ammonium phosphate (DAP) prices have climbed 25-50 per cent to around $850-1,000 per tonne. Urea and DAP are the two most widely consumed fertilisers in India, and the rising prices have put pressure on the government to take measures to mitigate the impact on farmers.

West Asia accounts for 20-30 per cent of India’s urea requirement and 30 per cent of DAP imports, while supplying nearly half of the country’s LNG imports, a key feedstock for urea production. The conflict in West Asia has disrupted the supply of key raw materials such as ammonia, sulphur, and sulphuric acid used in domestic production of phosphatic and potassic fertilisers.

Fertiliser Subsidy Burden

The fertiliser subsidy burden has been mounting due to the rising global prices, and the government has taken measures to mitigate the impact. The Union Cabinet recently approved a 10-21 per cent increase in per-kg subsidy rates for non-urea fertilisers for kharif 2026 under the nutrient-based subsidy (NBS) regime, compared with kharif 2025.

The move is estimated to cost the exchequer about ₹41,534 crore, around 12 per cent more than the previous season. The government has also pegged the fertiliser subsidy at ₹1.7 trillion in the FY27 Union Budget, 8.4 per cent lower than the FY26 revised estimate of ₹1.86 trillion.

Impact on Indian Farmers

The rising fertiliser prices have put pressure on Indian farmers, who are already facing challenges due to the Covid-19 pandemic and other factors. The government’s decision to maintain retail fertiliser prices will provide relief to farmers and help them to continue their farming activities without disruption.

However, the government’s move may also have an impact on the fertiliser industry, which may face challenges in maintaining production levels and meeting the demand for fertilisers. The industry may also face challenges in terms of profitability, as the government’s subsidy burden increases.

Conclusion

The government’s decision to maintain retail fertiliser prices for farmers is a welcome move, as it will provide relief to farmers and help them to continue their farming activities without disruption. However, the move may also have an impact on the fertiliser industry, which may face challenges in maintaining production levels and meeting the demand for fertilisers.

Indian farmers can stay updated on the latest developments in the fertiliser prices and the government’s policies by following reputable sources of information, such as agricultural news websites and financial news portals.

Investing in the Fertiliser Industry

Investors who are interested in the fertiliser industry can consider investing in fertiliser stocks, which may benefit from the government’s subsidy policies. However, investors should also be aware of the challenges facing the industry, such as the rising global prices and the government’s subsidy burden.

Investors can stay updated on the latest developments in the Indian stock market by following reputable sources of information, such as stock market news websites and financial news portals.