The government has spent over Rs 70,000 crore in the current fiscal so far under fertiliser subsidies which is 40% of the budget estimate of Rs 1.77 lakh crore because of rise in global prices of soil nutrients since the West Asia war, the government stated in Rajya Sabha on Tuesday.
Sources told FE that while actual subsidy incurred in FY26 was Rs 2.17 lakh crore against revised estimate of Rs 1.86 lakh crore, actual subsidy outgo is likely to be higher in the current fiscal because of elevated global prices levels of soil nutrients.
According to the department of fertiliser, urea prices rose by 45% to $ 572/tonne in June, 2026 compared to a year ago period, while the rise in global price of the fertiliser variant has reached as high as $ 947/tonne in May, 2026 before softening.
Out of the total estimated urea consumption of 40 million tonne (MT) in FY26, 10 MT was imported while a large portion of domestic output depends on LNG as feedstock.
“To meet the kharif demand amidst West Asia crisis, the government agencies has secured 4.27 MT of urea supplies through global tender.India has also entered into a long terms supply arrangements with Oman for ensuring long term supply of 4.5 MT urea for next 5 years,”department of fertiliser stated in the parliament.
The closure of the Strait of Hormuz since February has led to severe disruption in supplies of raw materials like LNG and finished products of soil nutrients. The government had to diversify its imports and purchased fertiliser variants from the spot market.
The global prices of DAP, second highest soil nutrient variant in terms of usage, has gone up to $ 933/tonne last month, an increase of around 21% on year.
Urea continues to be sold at Rs 266.50 per 45 kg bag against global prices exceeding Rs 4,000 a bag. This price has remained unchanged since March 2018. Despite the global price fluctuations, the retail price of DAP is maintained at Rs 1,350 per 50 kg bag for farmers, a senior official said.
The prices of ammonia and sulphur, used for manufacturing several complex fertilisers variants like NPKs – nitrogen (n), phosphorous (p) and potash (p) also seen a sharp rise to $ 1050/tonne and $ 775/tonne in June, 2026, an increase of 264% and 94% respectively on year. These raw materials were imported largely from Bahrain, Kuwait and Saudi Arabia.
Potash prices have gone up by 9% to $ 383/tonne last month compared to prices prevailed a year ago because of the rise in transportation cost from Russia.
In terms of global supplies, Saudi Arabia’s long-term contract with India to supply 3.1 MT of DAP annually for five year remains intact. Russia and Morocco continue to supply urea and DAP via Cape of Good Hope, South Africa continues.
India imports about 70% of its fertiliser and its raw material usage. Annual consumption of several variants of fertiliser in FY26 was over 70 MT.