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With easing supplies and diversified imports, the landed cost of urea, India’s most consumed soil nutrient variant, has declined by around 57%% to $406/tonne last month, down from a peak of $ 947/tonne in May, 2026.
The global price of urea has dropped 23% in August on year, according to the Department of Fertilisers.
Officials said that with softening prices, especially in the last couple of months, the government is continuously reassessing the initial fertiliser subsidy budget projected at the beginning of the current fiscal year due to a price spike caused by the West Asia war.
“If the current global price trend of soil nutrients continues, fertiliser subsidy may be higher by around Rs 15,000 – 20,000 crore from actual subsidy expenses in the previous fiscal,” a source said.
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In FY26, expenditure on fertiliser subsidies was Rs 2.17 lakh crore – Rs 1.42 lakh crore for urea and Rs 74,999 crore for nutrient-based subsidy. This was a 17% increase over the revised estimate of Rs 1.86 lakh crore. This, according to officials, is due to the rise in fertiliser prices from March 2026.
This is still much lower than the department of Fertilisers’ internal estimate in the middle of the serious supply disruptions in April-May, which suggested the subsidy bill could spike to even Rs 3 lakh crore.
The government has spent close to Rs 1 lakh crore so far under fertiliser subsidies which is 56% of the budget estimate of Rs 1.77 lakh crore due to the rise in global prices of soil nutrients since the West Asia war. A chunk of subsidy of Rs 77,871 crore has been incurred towards imports and domestic production of urea.
Sources said that the three agencies entrusted with imports for fertilisers – National Fertiliser, Rashtriya Chemicals and Fertilisers and Indian Potash – have imported 4.74 million tonne (MT) of urea, boosting domestic stock in the current fiscal.
By the end of August, the government’s urea stock was 7.51 MT, 78% higher than the previous year’s level. Industry sources said that urea prices went up sharply since the beginning of the West Asia war as supplies of LNG, a key feedstock for urea manufacturing and finished products imports, were severely disrupted because of conflict.
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As part of its diversification plan, the government has started importing urea from several countries including Oman, Malaysia, Vietnam, Georgia, Nigeria, Russia, Finland, Egypt, Algeria, Turkey, and the Netherlands.
In FY26, out of the total consumption of 70 MT of fertiliser, urea consumption was 40 MT. While India imported about 10 MT of urea last fiscal, domestic production of soil nutrient mostly depends on imported feedstock as LNG.
However, the global prices of diammonium phosphate (DAP) have increased to 8.4% to $ 925/tonne in August, from $ 853/tonne in April, 2026, according to official data. The rise in global price of DAP according to trade sources is because of the rise in freight due to conflict in West Asia.
Import of DAP and nitrogen, phosphorus, and potassium (NPK) variants were procured from Russia, Morocco, Egypt, USA, Jordan, South Korea, Tunisia, and Saudi Arabia via the Red Sea.
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 has been maintained at Rs 1,350 per 50 kg bag for farmers, a senior official said.
TOPICSUreaThis article was first uploaded on September fifteen, twenty twenty-six, at forty-six minutes past eleven in the night. © The Indian Express (P) Ltd