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May 18, 2026: India’s fertiliser subsidy burden is expected to increase significantly in FY27 as rising tensions in West Asia continue to push up global prices of urea, DAP, natural gas, ammonia, and other key raw materials. The ongoing disruptions around the Strait of Hormuz have raised concerns over India’s growing dependence on imported fertilisers and energy inputs. Industry estimates suggest that India’s fertiliser imports increased sharply during FY26 as domestic production remained largely stagnant while consumption continued to rise. Fertiliser consumption is estimated to have grown by around 3 per cent, whereas domestic production remained nearly flat at about 517 lakh metric tonnes. To bridge the widening supply gap, imports reportedly surged to nearly 249 lakh metric tonnes, significantly increasing India’s import dependence. The impact is particularly severe in urea and DAP, which are the country’s most widely used fertilisers. For urea, domestic production during FY26 stood at around 293 lakh metric tonnes, while imports increased substantially to build sufficient stocks for the Kharif season. India continues to depend heavily on West Asian countries for urea imports, making supplies vulnerable to geopolitical disruptions and freight uncertainties. DAP imports present an even bigger challenge, with import dependence estimated at nearly 68 per cent in FY26. International DAP prices have reportedly climbed to nearly USD 900 per metric tonne, almost double the levels seen before the current crisis. However, with retail prices fixed domestically, import economics remain under pressure despite government subsidy support. Global prices of key raw materials have also surged sharply since March 2026. Ammonia prices are estimated to have increased by nearly 60 per cent, while sulphur prices rose by around 50 per cent. India imports a major share of these raw materials from Gulf countries, increasing the sector’s exposure to supply disruptions in the region. At the same time, imported natural gas prices have also risen significantly. Since a large portion of India’s fertiliser sector depends on imported LNG, higher gas prices are expected to increase production costs for domestic fertiliser manufacturers. In April 2026 alone, international urea prices reportedly jumped by nearly 85 per cent month-on-month to around USD 950 per tonne, while DAP prices increased by about 30 per cent following disruptions in fertiliser and gas trade routes. Despite the sharp increase in global prices, the immediate availability situation for the upcoming Kharif season remains relatively comfortable. Fertiliser inventories as of April 2026 are estimated to be well above normal levels, providing a temporary cushion against any immediate supply shortages. However, the larger concern remains the growing subsidy burden on the government. After declining over the past two years due to softer input costs, fertiliser subsidy requirements are now expected to rise again as global prices continue to remain elevated. Industry observers believe the budgeted fertiliser subsidy allocation for FY27 may prove insufficient if current global price trends continue, potentially forcing additional financial support during the year. Experts also warn that below-normal monsoon forecasts, rising import dependence, higher logistics costs, and volatile international energy markets could keep the fertiliser sector under pressure throughout FY27. At the same time, balanced fertiliser use, efficient nutrient management, and increased domestic production of fertilisers and raw materials are expected to become critical policy priorities in the coming months.