Fertiliser subsidy: Kharif 2026 outlay ₹41,534 cr

What the government approved and why it matters

India has moved to raise fertiliser subsidies for the Kharif 2026 season as global prices of key nutrients surge amid geopolitical tensions in West Asia and supply disruptions around the Strait of Hormuz. The Union Cabinet approved nutrient-based subsidy (NBS) rates for non-urea fertilisers with a 10 to 21% increase in per-kg subsidy rates compared with Kharif 2025. The estimated cost to the exchequer is ₹41,533.81 crore (also reported as ₹41,534 crore), reflecting higher import and input costs.

Officials have signalled that the increase in subsidy support is intended to keep maximum retail prices (MRPs) unchanged for farmers despite higher global prices. Finance Minister Nirmala Sitharaman said the government may continue to protect farmers from rising global fertiliser prices, referring to the approach taken during the Covid period when additional costs were not passed on to farmers.

Finance Ministry clears higher support and buffer build-up

Alongside the Cabinet decision on NBS rates, the Finance Ministry approved an additional fertiliser subsidy for April to June 2026. The government has also built a buffer in fertiliser availability, with stocks reported to be higher by 21 lakh tonnes compared to last year. The stated policy thrust is to keep fertiliser prices unchanged for farmers even as import costs rise.

Officials and market participants have linked the pressure on the subsidy bill to the West Asia crisis, which has disrupted shipping and input supply lines. The news flow also points to operational disruptions, including India scrapping a fertiliser shipment over Iran-linked concerns and ABGT withdrawing a urea cargo citing worries about US sanctions.

Subsidy bill likely to overshoot budget estimates

The fertiliser subsidy outgo for the current financial year was initially budgeted at ₹1.71 lakh crore. But officials have indicated that global price increases could force higher spending. Aparna S Sharma, Additional Secretary, Department of Fertilisers, said costs have risen and that an increase is likely, though the final number could not be specified.

Multiple estimates in the report set out the extent of the fiscal risk. One assessment said the fertiliser subsidy bill could rise by around 20% this financial year as global prices of key nutrients surge. Crisil Intelligence Director Pushan Sharma projected that for FY26, the fertiliser subsidy could be 14% above the budget at ₹1.92 lakh crore and 3% above revised estimates, driven by elevated DAP and urea imports. Separately, budget tracking cited fertiliser subsidy spending of ₹1.88 trillion by February 2026, exceeding the FY26 revised estimate.

Global price shock: urea and DAP move sharply higher

The immediate driver is the jump in international prices since early March. Global urea prices rose from around $160 per tonne to nearly $150 per tonne. DAP prices climbed 25 to 50% to around $150 to $1,000 per tonne. The government has indicated it will absorb the shock through higher subsidies rather than changing retail MRPs.

A senior official was quoted as saying fertiliser prices have almost doubled but there is no change in the MRP of fertilisers. The article notes that farmers are expected to continue getting key fertilisers such as urea, DAP and potash at existing prices, with subsidies paid directly to companies.

Kharif 2026 demand and stocking position

The Department of Agriculture has estimated total fertiliser requirement for Kharif 2026 at 390.54 lakh tonnes. States have already stocked 195.71 lakh tonnes, close to half the requirement, indicating advance procurement and planning.

Separately, the report states that India has about 19.02 million tonnes of fertilisers in stock against a requirement of 39.05 million tonnes for the Kharif season. In another update, fertiliser stocks were reported to have reached 193 lakh tonnes.

The Department of Fertilisers also said availability for the Kharif 2026 season remains “strong and stable” despite supply chain disruptions caused by the regional crisis. State-wise demand has been finalised and advance stocking completed, while redistribution within districts will be handled by state governments.

Import tenders and supply actions underway

To manage supply during peak demand, fertiliser companies and the government have initiated multiple import actions. A global tender for urea imports has already been processed, with supplies slated to arrive in May to June. A separate global tender has been floated for 19 lakh tonnes of NPK fertilisers.

In addition, fertiliser companies have issued a global tender for 1.2 million tonnes of DAP, 400,000 tonnes of triple super phosphate (TSP), and 300,000 tonnes of ammonium sulphate. Officials said these steps are aimed at ensuring adequate availability during peak demand.

Key figures at a glance

Market impact and operational signals

The core market impact is on the government’s fiscal arithmetic as subsidy needs rise when global nutrient prices climb. Reports suggest the fertiliser subsidy could cross the ₹2 lakh crore mark, though no official number has been confirmed in the text.

On the ground, the government’s stated approach is to keep MRPs stable and maintain supply, which reduces the risk of an immediate rise in farm input costs. The Cabinet-approved subsidy is also aimed at keeping the price of 50-kg bags of DAP steady at ₹1,350 despite higher import prices.

Information and broadcasting minister Ashwini Vaishnaw said there is no problem of availability in India, while warning against hoarding. The nutrient-based subsidy regime covers 28 grades of P and K fertilisers, which are sold to farmers at a discount and reimbursed by the government.

Wider crisis management: energy reserves and domestic production

The broader policy context includes parallel steps on energy security amid the same regional tensions. The government said India maintains 60 days of crude oil reserves amid conflict, and that LPG reserves have increased, with domestic production up to 50,000 tonnes.

On fertilisers, natural gas constraints have emerged as a key vulnerability. Crisil’s Pushan Sharma said natural gas shortages, exacerbated by disruptions around the Strait of Hormuz, curtailed domestic urea production by 25% in March 2026. The government has also sought to lift output by increasing LNG supplies, with domestic urea production boosted by 12,000 to 15,000 tonnes per day, according to the report.

Conclusion

India’s fertiliser policy response to the West Asia crisis is being built around higher subsidy support, advance stocking, and import tenders, while keeping retail MRPs unchanged for farmers. With Kharif demand estimated at 390.54 lakh tonnes and global urea and DAP prices sharply higher, the subsidy bill is widely expected to overshoot the ₹1.71 lakh crore budget estimate. The next set of clarity is likely to come from actual subsidy outgo trends as May to June import supplies arrive and the Kharif season progresses.