Fertiliser demand surged in July 2026 as kharif sowing gathered pace after improved monsoon conditions. Against an estimated demand of 74.28 lakh tonnes for July, the peak sowing month for most kharif crops, fertiliser sales touched 41.09 lakh tonnes by July 17, indicating that over half the month's projected demand had already been met. Urea accounted for 25.86 lakh tonnes of sales, more than 62% of its estimated monthly demand of 41.67 lakh tonnes and nearly two-thirds of total fertiliser off-take. In comparison, sales of di-ammonium phosphate (DAP) stood at 5.74 lakh tonnes against a projected demand of 12 lakh tonnes, while Muriate of Potash (MoP) was 1.07 lakh tonnes against 3.54 lakh tonnes, and complex fertilisers at 8.42 lakh tonnes against 17.07 lakh tonnes.
The sharp recovery in fertiliser demand coincided with a revival in kharif sowing following improved monsoon rains in July. The sowing deficit in paddy narrowed to 2% as of July 31 from 9% on July 10, while the shortfall in cotton reduced to 2% from 15% and in maize to 7% from 20%. Overall kharif sowing was less than 3% below last year's level by July-end, compared with a 4.7% deficit a week earlier. As per The Hindu BusinessLine, S K Singh, an agriculture scientist, noted that there has been a significant rise in sowing of paddy, maize and cotton in July, consequently demand for fertilisers has increased. The Agriculture Ministry has projected August demand at 38.01 lakh tonnes of urea, 9.81 lakh tonnes of DAP, 3.27 lakh tonnes of MoP and 15.27 lakh tonnes of complex fertilisers.
The Union Cabinet has approved a new National Investment Policy for Urea (NIPU-2026) after a gap of almost 14 years, with the objective of establishing 8-9 gas-based urea plants - both brownfield and greenfield - with a combined production capacity of 10 million tonne (MT). According to reports from Business Standard, each new plant will have an approximate production capacity of 1.27 MTPA. The policy framework extends the 2012 New Investment Policy (NIP) with revisions, with plants to be set up by both private and government sectors, including cooperatives. Union Information and Broadcasting Minister Ashwini Vaishnaw released the policy, stating that India's urea consumption is around 40 MT, while current domestic production is close to 30 MT, with the gap being filled by imports.
The new investment policy assumes project costs of ₹11,000 crore for greenfield category and ₹9,000 crore for brownfield category, based on an exchange rate of ₹90 to the dollar. As reported by Business Standard, this would put cumulative investment by the new policy close to ₹90,000 crore-₹1 trillion over the next 5-8 years. The policy includes a guaranteed buy-back for units for a period of eight years from the date of start of production. Key changes from NIP-2012 include separation of fixed and variable costs for greater transparency, introduction of a viable return on equity (RoE) band with a floor at 12 per cent and a ceiling at 16 per cent, and mitigation of foreign exchange risk through conversion of fixed costs into rupee after four years based on prevailing exchange rates.
Despite July's strong performance, fertiliser sales in the first quarter (April-June) remained lower than a year ago. Total sales of the four major fertilisers declined 5% to 115 lakh tonnes from 121.19 lakh tonnes in the corresponding period last year. Urea sales fell to 65.06 lakh tonnes from 69.99 lakh tonnes, while MoP and complex fertilisers also recorded lower off-take. According to sources, the decline followed an unusually strong April, when fertiliser sales surged 25% to 23.59 lakh tonnes. The government subsequently introduced measures, including linking fertiliser distribution with Agristack data in select States, to curb excess purchases. Demand was further dampened by a weak monsoon in June, when rainfall ended 35% below normal and kharif sowing lagged by nearly 20%.
