India’s Fertiliser Subsidy Projected to Surpass ₹3 Lakh Crore This Fiscal Year

The imported Diammonium Phosphate (DAP) prices have surged drastically as the ongoing conflict has escalated pressures on global markets. Currently, DAP costs around $940 per tonne, a steep increase from $681 per tonne prior to the war. This uptick in prices will significantly impact India’s fertilizer subsidy bill, which is projected to exceed ₹3 lakh crore this fiscal year, exacerbating cost pressures for the agricultural sector.

The sharp rise in DAP prices is primarily driven by constrained global supplies and fluctuating raw material costs. The war has severely limited the availability of essential inputs like sulfur, which is crucial for the production of phosphoric acid—an integral component of phosphatic fertilizers. Consequently, the prices of sulfur have more than doubled, from $532 per tonne to around $1,050 per tonne. Additionally, geopolitical tensions have affected urea production due to a substantial drop in gas supplies—over 60% compared to pre-war levels—leading to further price hikes for fertilizers dependent on imported LNG.

In the short term, traders and investors should brace for continued volatility in the fertilizer market as demand for DAP and other fertilizers remains high amidst reduced availability. The government is attempting to stabilize the situation by encouraging balanced nutrient applications and promoting organic farming. However, the ongoing geopolitical uncertainties may further impact supply chains, making it vital for market participants to closely monitor global developments and adjust their strategies accordingly.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)