Amid a sharp rise in global fertiliser prices triggered by the West Asia crisis, the Ministry of Chemicals and Fertilizers has approached the Ministry of Finance seeking to double the fertiliser subsidy allocation for the current financial year, government sources said.
The Union Budget for FY27 had provided Rs 1.77 lakh crore towards fertiliser subsidies. However, with international prices rising sharply and supply conditions tightening, the ministry has sought a 100% increase in the allocation, according to officials.
"Given the pace at which fertiliser prices are rising, the Fertilizers Ministry has sought a doubling of the subsidy allocation. Supplies are constrained while demand remains strong," a senior Finance Ministry source familiar with the matter said.
Government officials said the subsidy burden on urea has increased significantly, with the subsidy per bag rising from around Rs 2,900 to nearly Rs 4,500. The increase is placing substantial pressure on government finances.
"We cannot ask farmers to pay even Re 1 more for fertilisers, and we have little control over international prices. This is creating significant stress on fiscal resources," a senior government official said. "At the same time, efforts are underway to boost domestic production, which could help ease some of the pressure."
India imports nearly 25% of its fertiliser requirement. Domestic fertiliser production rose to 52.5 million tonnes in 2025 from 50.95 million tonnes in 2024, but officials said higher output alone may not be sufficient to offset the impact of rising global prices.
Despite the growing subsidy burden, government sources indicated that there is currently no proposal to seek additional funds through a supplementary demand for grants during the upcoming Monsoon Session of Parliament.
Officials also pointed to increasing challenges in global fertiliser procurement. "The fertiliser market is becoming increasingly complex. Several suppliers are staying away from the market, narrowing the pool of available sources. China, which had remained largely absent from the market over the past two years, is now supplying again, but supply-side uncertainties persist," an official said.
Apart from fertiliser prices, policymakers are also closely monitoring weather-related risks. Sources said the government will assess the impact of El Niño conditions on agriculture and the broader economy after July, as concerns over monsoon performance and crop output continue to mount.