The Union Cabinet headed by Prime Minister Narendra Modi approved the approval on Wednesday $41,534 crore to support nutrient-based fertilizers for the summer planting season, increasing it by $4,317 crore, an almost 12% jump over the previous crop cycle, to offset higher costs and support farmers amid supply disruptions due to conflict in West Asia.
The higher subsidy, which covers mixed crop chemicals, is intended to keep the price of 50kg packages of diammonium phosphate (DAP) fixed at a constant level. $1,350 despite the rise in import prices.
“The conflict in West Asia has had an impact on fertilisers. There is no problem with their availability in India. Some people have started hoarding them, which is not a good thing,” Information, Radio and Television Minister Ashwini Vaishnaw told a press conference.
The nutrient-based subsidy system provides fertilizers to farmers at below market prices based on their phosphate and potassium content, which aims to discourage overuse.
Food security in the world’s most populous country is closely linked to the availability and affordability of key fertilizers, as farmers prepare for the summer planting season.
The government provides 28 grades of P&K fertilizers, which are also covered, to farmers at subsidized prices through manufacturers and importers. These crop nutrients are sold by manufacturers at a discount, and then reimbursed by the government.
Fertilizer manufacturers say the ceasefire announced by Iran and the US has come as a breather, which will help boost availability. “The ceasefire is a positive and timely development, as it is expected to improve the availability of LNG from the Gulf and support uninterrupted fertilizer supply ahead of the kharif planting season. This will help stabilize domestic production, ease import-related cost pressures, and curb speculative price increases,” said BS Gahlot, Managing Director, Indian Potash Limited.
The country depends on imports of fertilizers such as urea, diphosphate, and muriate of potash, in addition to liquefied natural gas, which is used to operate plants that feed crops.
The latest increase in support relates to a category of crop nutrients that is highly dependent on imports. The rising shipping costs and supply crunch, caused by Iran’s blockade of maritime traffic through the Strait of Hormuz, came just two months before the kharif or summer planting season, which accounts for half of India’s annual food supply.
Millions of farmers rely on subsidized crop nutrients to grow a range of crops, such as rice, pulses, soybeans, maize and cotton, which are critical to food security in the world’s most populous country. Price increases or shortages can spark anger among food producers, who often have influential union affiliations. Last year, farmers in some states, such as Andhra Pradesh, faced temporary disruptions after China reduced exports.
The West Asian crisis will increase overall annual government support. The higher spending comes as the country plans to promote rational use of heavily subsidized crop nutrients.
The use of urea in India, for example, rose by about 170% from 2009-10 to 2023-24, the government’s Economic Survey 2025-26 said in February. Overuse of cheaply available agrochemicals has had dire consequences, ranging from depleted soil quality to poor yields.
Just days before the US and Israel launched strikes on Iran, Agriculture Minister Shivraj Singh Chouhan called for the country’s crops to be transferred to Iran. $1.71 lakh fertilizer subsidies directly to farmers’ bank accounts, rather than channeling them through crop nutrient manufacturers for more efficient distribution and less misuse.
India is in talks with several countries to secure fertilizers, whether from traditional or new suppliers, as it seeks to diversify imports.
