The government’s fertiliser subsidy bill for the current fiscal year is likely to exceed the budget estimate (BE) of Rs 1.77 lakh crore by 20% or around Rs 35,000 crore, due to the spurt in global urea prices and the ongoing blockage of the Strait of Hormuz, a fertiliser ministry official said on Monday.
“As per the current assessment, subsidy outgo is likely to increase by over 20% from the estimates and it would cross over Rs 2.12 lakh crore in FY27,” the official said.
The fertiliser subsidy expenditure, according to official sources was Rs 2.17 lakhc crore in 2025-26 — Rs 1.42 lakh crore for urea and Rs 74,999 crore for nutrient based subsidy, an increase of 29% over BE. Trades sources said that if the West Asia conflict prolongs, the subsidy outgo could increase further from the BE.
Rs 1.22 lakh crore allocated for urea in current fiscal year
For the current fiscal year, the government allocated Rs 1.22 lakh crore for urea and Rs 54,000 crore for nutrient-based subsidy regime. These are likely to be revised given that there is a spurt in the global prices of urea and Diammonium Phosphate (DAP) due to closure of Strait of Hormuz leading to severe disruption in supplies of raw materials like LNG and finished products of soil nutrients.
Sources said that so far expenditure towards urea purchase in the current fiscal is 13.11% of Rs 1.22 lakh crore.
Last time global conflict impacted the subsidy outgo was in FY23, when fertiliser subsidy was at a record Rs 2.54 lakh crore as shipping of supplies through the red sea was impacted due to Ukraine-Russia conflict.
In an official briefing Aparna Sharma, additional secretary, department of fertilizers said the department is in constant touch with the department of expenditure regarding the higher prices of fertilizers in the global market and will inform the latter on any required increase in subsidies.
“The prices of urea as well as LNG have doubled since February,” Sharma noted. She also said that the increase in global prices would not impact the farmers and the maximum retail price of the commodity in the Indian market would remain intact.
Urea continues to be sold at Rs 266.50 per 45 kg bag against global prices exceeding Rs 4000 a bag. Despite the global fluctuations in prices, the retail DAP prices are maintained at Rs 1,350 per 50 kg bag for farmers. according to the official.”This shows the government’s commitment to shielding farmers from global price volatility while ensuring affordability and accessibility,” according to an official note.
Sharma said that the fertiliser ministry plans to import 6.4 MT of urea and 1.9 MT of other fertilisers this kharif season while allaying fear of any supply challenges. In February, 2026, 1.3 MT urea import order was placed and the government recently approved importing 2.5 MT of urea through bypassing Strait of Hormuz, which is likely to arrive over the next couple of months.
On the availability of fertilizers, Sharma said that currently there are 19.02 MT of fertilisers – urea (7.1 MT, DAP (2.23 MT), NPKs (5.75 MT), SSP (2.62 MT) and muriate of potash (1.24 MT), which is 49% of the estimated projected demand of 39 MT for the forthcoming kharif season. There is higher stock of soil nutrients currently against the norm of 33%.
The ministry has stated that current urea availability of 7.14 MT, against a requirement of 2.05 MT and DAP stock of 2.3 MT against 0.66 MT of requirement.
“Now we have taken measures to import gas (at the spot market) even at a higher cost. Availability of gas for urea units, which earlier was 60-65%, is now 97%. So our urea production has been very good after that,” she said. Post the West Asia crisis, domestic urea production has reached 3.54 MT.