India has successfully secured 1.7 million tonnes of urea imports at significantly reduced prices, marking a substantial recovery from earlier crisis levels. The latest tender, floated by Rashtriya Chemicals and Fertilizers (RCF) on July 29 with bids opened on August 11, secured 10 lakh tonnes for western coast ports and 7 lakh tonnes for eastern coast at $390.25-$393.65 per tonne. This represents a dramatic improvement from earlier tenders that saw prices as high as $959 per tonne in April - nearly double pre-war levels. The tender drew bids totalling over 55 lakh tonnes, well above the quantity on offer, with Switzerland-based Ameropa Group emerging as the lowest bidder on both legs of the contract. As per The Indian Express, these rates are far below the $444.9-$449.3 and $935-$959 price bands seen in earlier import tenders this fiscal, marking one of the steepest declines in recent contracts.
India's fertilizer subsidy bill has reached ₹3.32 trillion in fiscal year 2026 (FY26), with the fertilizer ministry proposing ₹3.54 trillion for FY27. According to reports from The Economic Times, this spending occurs despite significant nutrient losses that undermine the effectiveness of subsidized farm inputs. The country's annual fertilizer requirement was estimated at about 67.7 million tonnes for FY26, including urea, diammonium phosphate (DAP), muriate of potash (MOP) and nitrogen, phosphorus and potassium (NPK) fertilizers. Urea accounts for 45% of fertilizer consumption in India and is the most-used soil nutrient, applied right after planting around the end of June. India is also the world's largest urea importer and sells it to its farmers at nearly 90% subsidized rates. The spending on fertilizer subsidies is "money being used inefficiently, ineffectively," said Avinash Kishore, a senior research fellow at the International Food Policy Research Institute. "It is baking in unhealthy, not environmentally friendly, unproductive practices in Indian agriculture."
Prime Minister Narendra Modi has urged farmers to cut urea consumption by up to 50% as part of efforts to curb dependence on major imported goods. In a May speech, Modi said it's "essential" for the country to reduce consumption of chemical fertilizers, urging farmers to "save our Mother Earth" and "do it." The agriculture ministry has campaigned nationwide through June to urge farmers to reduce use, just as sowing of monsoon crops began. Agriculture Minister Shivraj Singh Chouhan called for soil testing, warning that overapplication kills beneficial microorganisms, reduces yields and raises costs. However, farmers remain resistant to change, with many citing concerns about yield protection and income security. The government faces a difficult balancing act, containing subsidy costs and excessive urea use while protecting farmers, food production and national food security.
Cooperatives in key states are taking steps to ration supply as the government seeks to rein in spending. Farmers like Sukhbir Ram estimate they need four to five 45-kilogram bags of urea per acre for their rice crop, but received only three per acre from their fertilizer supplier due to rationing instructions. A fertilizer ministry official said India has capped subsidized fertilizer purchases to curb diversion and ensure equitable distribution, with some states restricting sales to 50 bags a month per buyer. A new distribution framework is being piloted in 40 districts, where farmers will pre-book fertilizer based on landholding and crops sown, with limits designed to ensure supply is proportional to actual farm needs. The government has also approved a new program aimed at attracting investment to increase India's annual urea production capacity by 10 million tons, about a third higher than current levels.
The sharp price decline is attributed to two broader trends: an easing of the energy-linked supply shock that had gripped West Asia earlier this year, and a build-up of surplus urea stock in China, where in-plant inventories were running significantly higher than a year ago. According to The Indian Express, an industry source pointed to Iranian material increasingly reaching global markets via China. Meanwhile, according to Fertiliser Association of India data, urea imports between April and June this year were sharply higher than the same period last year, while domestic production also posted an increase over the same window. The government had worked to diversify sourcing of liquefied natural gas, a key input for domestic urea manufacturing, after supplies from Qatar and Saudi Arabia nearly dried up following the closure of the Strait of Hormuz, with alternative volumes contracted from countries including the US, Oman and Indonesia.
