Fertiliser Subsidy to Hit ₹1.95 Lakh Crore in FY26 on Surge in Demand

The government’s fertiliser subsidy is projected to rise to ₹1.95 lakh crore in FY26, up from the budget estimate of ₹1.67 lakh crore, driven by higher domestic consumption and record imports of urea, DAP, and MOP. Despite stable global prices, demand surged during the kharif and rabi seasons, pushing import volumes up 60% to 17.37 million tonnes (MT) between April–November 2025, with full-year imports expected to reach a record 20 MT. Urea demand rose 8% and 2% in the last two seasons, while the country continues to import 20% of its urea and two-thirds of its DAP needs. India is fully dependent on imports for potash, sourcing mainly from Russia, Belarus, Jordan, and Israel under long-term agreements. The government had already released an additional ₹18,525 crore as supplementary grant in December 2025, with another ₹10,000 crore likely added at the revised estimate stage. In FY25, the final outgo reached ₹1.91 lakh crore — well above the BE — highlighting the dynamic nature of subsidy costs, which depend on global nutrient and LNG prices. With rising farmer demand and limited domestic capacity, experts expect continued pressure on fiscal outlays, and anticipate that the FY27 budget may set a lower initial allocation, knowing that top-ups through supplementary grants are likely. ICRA had earlier flagged that the FY26 P&K subsidy provision would be inadequate, necessitating mid-year revisions. India meets about 73% of its fertiliser needs through domestic production, but remains heavily reliant on imports for key raw materials like rock phosphate and potash, underscoring strategic vulnerabilities and the need for enhanced self-reliance.