The Union Cabinet on Wednesday approved a fertiliser subsidy budget of Rs 62,370 crore for the Rabi 2026-27 season, marking a sharp increase of 64.3% over the Rs 37,952 crore allocated for the previous season. The additional Rs 24,418 crore comes amid rising international fertiliser prices and higher input costs, with disruptions to global supplies adding to the pressure.
India’s dependence on fertiliser imports has made it particularly vulnerable to the disruption in international trade following the US-Israel attacks on Iran in February. Restrictions on shipping through the Strait of Hormuz, a major route for global fertiliser supplies, have further affected the market. The higher subsidy is aimed at ensuring farmers continue to get fertilisers at affordable prices despite rising costs.
Why has the government increased the fertiliser subsidy?
International fertiliser prices rose sharply after the conflict disrupted supplies through the Gulf region. According to the World Trade Organization (WTO), India sourced nearly two-thirds of its nitrogenous fertiliser imports from the Gulf region, based on 2024 trade data.
The impact was visible in the price of key fertilisers. Urea, which cost around $400 per tonne before the conflict, rose to more than $850 per tonne in April. Prices of di-ammonium phosphate (DAP) also climbed from approximately $580 to $770 per tonne during the same period. Urea prices later eased to around $453 per tonne in June.
However, the pressure on phosphate fertilisers has continued. A September assessment by the International Food Policy Research Institute found that phosphate supplies remained tight and expensive. Shortages of sulphur were also continuing to affect production and trade, even as nitrogen markets moved closer to their pre-war levels.
What is the Nutrient Based Subsidy scheme?
The government provides subsidies on 28 grades of phosphatic and potassic (P&K) fertilisers under the Nutrient Based Subsidy (NBS) scheme, which has been in place since April 2010.
Under this system, the subsidy is calculated according to the nutrient content of each fertiliser grade. The rates are revised periodically, taking into account changes in international and domestic market conditions.
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the NBS rates for P&K fertilisers, including DAP and NPKS grades, for the period from October 1, 2026, to March 31, 2027.
How will the subsidy benefit farmers?
The approved subsidy will be provided directly to fertiliser companies at the notified rates to ensure that farmers can access fertilisers at affordable prices.
For the previous Rabi season, the government had fixed the nutrient subsidy at Rs 43.02 per kg for nitrogen, Rs 47.96 per kg for phosphate, Rs 2.38 per kg for potash and Rs 2.87 per kg for sulphur.
The increased allocation is expected to help offset the impact of higher international fertiliser and input costs while supporting the availability of essential nutrients for farmers during the Rabi season.
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