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With easing supplies and diversified imports, the landed cost of urea, the most consumed soil nutrient variant, has declined by around 60% to $392/tonne last month, down from a peak of $947/tonne in May 2026.
The global price of urea dropped over 15% in September on year, according to the Department of Fertilisers.
Officials said that with softening prices, especially in the last few months, the government is continuously reassessing the current budget estimates of Rs 1.84 lakh crore of fertiliser subsidy for FY27 due to volatility in global prices of soil nutrients caused by the West Asia war.
As part of its diversification plan, the government has been importing urea from several countries including Oman, Malaysia, Vietnam, Georgia, Nigeria, Russia, Finland, Egypt, Algeria, Turkey, and the Netherlands.
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Trade sources said that while urea prices fell from its peak in May, overall subsidy outgo towards soil nutrients would be around Rs 15,000 – 25,000 crore more than the Rs 2.17 lakh crore incurred during FY26 as importing of diammonium phosphate (DAP), muriate of potash and sulphur have been costlier.
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.
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.
Sources said in the first half of FY27, the government has spent over Rs 1.14 lakh crore so far under fertiliser subsidies, which is 65% of the initial budget estimate of Rs 1.77 lakh crore due to the rise in global soil nutrient prices since the West Asia war. A chunk of subsidy of Rs 87,316 crore has been incurred towards imports and domestic production of urea.
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 the soil nutrient mostly depends on imported feedstock as LNG prices have also seen an increase since the Gulf crisis.
DAP, potash & sulphur prices rise
However, the global prices of DAP increased by 9% to $906/tonne in September, from $853/tonne in April 2026, according to official data. The prices of DAP last month increased by 13% in September compared to $799/tonne a year ago, according to trade sources, because of the rise in freight due to conflict in West Asia.
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In addition, prices of sulphur, used in the manufacturing of fertiliser including DAP and single super phosphate, soared to 213% to $ 1030/tonne in September compared to the previous year because of global conflicts. Prices of muriate of potash have increased by 9% to $383/tonne last month on year.
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 October eighteen, twenty twenty-six, at nine minutes past eight in the night. © The Indian Express (P) Ltd