The government is considering a larger FY28 allocation as import prices, shipping costs and supply disruptions drive the fertiliser support bill sharply above its original budget.
India is preparing to raise fertiliser subsidies in the FY28 Budget, with early discussions pointing to a buffer of as much as 20% above the current allocation, as volatile global prices and shipping disruptions continue to strain the government’s fertiliser bill. The move reflects a familiar policy dilemma: keeping nutrients affordable for farmers while absorbing a sharp rise in import and distribution costs.
The pressure on the budget has already become visible in the current financial year. Business Today reported that the government set aside ₹1.70 lakh crore for fertiliser support, yet spending is now expected to cross ₹3 lakh crore, with more than 65% of the allocation already used. Officials have also asked the finance ministry to double the provision in the revised estimates, underscoring how quickly the subsidy has run ahead of the original plan.
The rise in costs is being driven largely by global market conditions. Business Standard reported in April that India expected its fertiliser subsidy bill to climb by at least 20% this year because of surging prices linked to the West Asia crisis, while the Union Cabinet had already approved higher subsidy rates for non-urea fertilisers in kharif 2026 to shield farmers from the shock. The fertiliser ministry has since sought a doubling of the allocation, according to The New Indian Express, as international prices and supply bottlenecks continue to squeeze the system.
At a recent security forum in Munich, Finance Minister Nirmala Sitharaman said India imports about 80% of its fertiliser needs and cannot simply pass the full cost on to farmers, many of whom work on small and fragmented holdings. She also highlighted higher shipping, insurance and transport costs, as well as the need for a separate emergency shipping fund. According to the figures cited in the Business Today report, the subsidy burden on a 45-kilogram bag of urea has risen from ₹1,350 to ₹2,775, while the subsidy on a 50-kilogram bag of diammonium phosphate, or DAP, has increased from ₹2,102 to ₹3,523.
International prices remain a key risk. The same report said DAP import prices have climbed from $681 a tonne before the conflict to $940, while sulphur has more than doubled to $1,050 a tonne. Domestic production of complex fertilisers has also fallen sharply, adding to supply concerns. Reuters-style budget reporting suggests the final FY28 provision will depend on where global fertiliser and fuel prices settle over the coming months, but for now the government appears to be building in a wider safety margin.
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