The sharp escalation in subsidy requirements comes amid concerns over disruptions in the Strait of Hormuz and rising dependence on costly imports.

India’s fertilizer subsidy bill could exceed ₹3 lakh crore in FY27, nearly double the Budget Estimate of ₹1.71 lakh crore, as the West Asia crisis drives up global prices of urea, LNG and other key inputs, official sources have told businessline.

The sharp escalation in subsidy requirements comes amid concerns over disruptions in the Strait of Hormuz and rising dependence on costly imports. Officials said the subsidy burden, earlier estimated at below ₹2 lakh crore before the geopolitical flare-up, has ballooned after the surge in global fertilizer and energy prices.

Elevated prices

“If the current situation persists through the Kharif season, the subsidy could cross ₹3 lakh crore. If elevated prices and supply disruptions continue into the Rabi season, it may even touch ₹3.5 lakh crore,” a senior official said.

In the FY27 Budget, Finance Minister Nirmala Sitharaman had provided ₹ 1.7 lakh crore of fertilizer subsidy that includes ₹1.16 lakh crore for urea sector (both domestic and imported) and ₹54,000 crore for phosphorus (P) and potash (K) sector. In 2025-26, the fertilizer subsidy was pegged at ₹ 1.86 lakh crore (Revised Estimate)

Speaking at the 37th foundation day event of SIDBI in Mumbai on Monday, Sitharaman said that there has been an “unimaginable jump” in the global fertilizer prices after the West Asia crisis. Echoing Prime Minister Narendra Modi’s austerity call, she asked people to focus on ‘3Fs’ — fuel, fertilizer and forex — in the current scenario.

Within a span of roughly 40 days during the recent crisis, global urea prices reportedly surged by nearly 65 per cent, rising from around $482 per tonne in late February 2026 to nearly $795 per tonne in early April. Recent Indian urea import tender (floated by IPL) found prices further jumping to $935-959 per tonne. In the case of LNG, the principal feedstock for urea production, prices have risen from nearly $10.4/MMBtu in late February to around $17.4/MMBtu by early-May, 2026 after peaking nearly $25.4/MMBtu during early-March.

Releasing a paper titled “Ensuring India’s Fertiliser Security Amid Rising Geopolitical Risks”, authored by ICRIER’s Ashok Gulati and others on Monday, NITI Aayog Member K V Raju urged the thinktank to suggest an implementable actions plan.

“Do not come back in 10 to 12 months saying the government did not do this or that. Kharif sowing is about to start, and recommendations must address this year, this current season,” Raju told ICRIER.

The NITI Aayog member also urged the FAO’s South Asia representative to be specific with alternatives, adding, “the crisis is now, and treatment is required now.” He wondered whether suppliers in Russia, Canada, Australia or Africa could effectively replace disrupted West Asian imports.

Published on May 25, 2026