New Delhi: India’s fertilizer subsidy burden could ease after the government’s latest tender to import 1.7 million tonnes (mt) of urea drew sharply lower landed price bids, relieving pressure on public finances strained by supply disruptions from the West Asia war.
The urea import tender by National Fertilizers Ltd (NFL) received landed price (cost-plus-freight) quotes in a range of $444.9-449.3 per tonne, two people aware of the development said. This is less than half the levels seen in an earlier procurement, which had drawn bids of $935–959 per tonne, with industry executives attributing the drop to China easing export curbs.
“State-run National Fertilizers Ltd received the lowest bids from Aditya Birla Global Trading, which quoted $444.9 per tonne for around 500,000 tonnes earmarked for deliveries in India’s east coast, while Ameropa Asia emerged as the lowest bidder for the deliveries in the west coast, offering $449.3 per tonne for supplies of about 234,000 tonnes,” the first of the two persons cited earlier said, both speaking on condition of anonymity.
“We have secured around 734,000 tonnes supplies from the two bidders and the rest of the quantity will be decided soon,” said the person cited above.
Queries emailed to NFL remained unanswered till press time.
Mint reported on Tuesday that the department of fertilizers has sought a doubling of fertilizer subsidy to ₹3.5 trillion for FY27 to offset mounting losses of manufacturers due to subsidized sales even as their costs soar due to the West Asia war-induced disruptions.
However, the sharp fall in procurement prices in the latest tender could lower the subsidy bill, easing pressure on government finances.
India has already secured about 2.5 mt of urea, 1.5 mt diammonium phosphate (DAP) and 1 mt NPKs (nitrogen, phosphorus and potassium), which will arrive at Indian ports in June-July.
The Indian Express on Wednesday reported that the NFL’s latest tender to import 1.7 mt of urea has received landed price quotes of $444.9-449.3 per tonne, lower than the winning landed price bids of $935-959 per tonne for an earlier tender.
“Easing of export restrictions by China has come at a crucial time as it will help in easing the fertilizer subsidy bill as well as ensure timely availability of fertilizers,” an industry source said, adding that improved availability in the global market had strengthened India’s bargaining position in the latest procurement round.
“Fertilizer subsidy will certainly come down if China is able to supply urea at lower prices, then automatically there is a case for India to procure urea from there as we are an import-dependent nation in terms of fertilizers. The benefit would be higher provided the supplies are coming from China. However, in case China eases supplies, global prices would also come down, although prices may not be as cheap as China offers. So, the pricing scenario overall may ease,” said Madan Sabnavis, chief economist at Bank of Baroda.
Earlier, the Indian Potash Ltd (IPL) tender issued on 4 April to import 2.5 mt urea attracted significantly higher landed prices, with contracts awarded at $935 per tonne for west coast deliveries and $959 per tonne for supplies at the east coast.
Shweta Saini, founder and chief executive officer (CEO), Arcus Policy Research, noted that although prices have eased from the highs reached in April, they are still elevated compared to the year-ago levels.
“The tender result is surely a good news for India’s subsidy bill but it shouldn’t be characterized as evidence that global fertilizer prices are falling. These prices are lower than the peaks reached during April 2026, but they continue to be higher compared to last year,” she said.
The decline in import prices comes as the Centre grapples with a swelling fertilizer subsidy bill driven by elevated global prices and disruptions linked to the ongoing conflict in West Asia. Industry executives said the sharp correction in urea import prices, if sustained, could moderate the government’s subsidy outgo.
Fertilizer subsidy remains one of the largest components of farm-sector support, alongside food subsidy and rural welfare spending. The bill had already crossed ₹2.17 trillion in FY26, underscoring the fiscal strain posed by efforts to insulate farmers from global commodity price shocks.
Meanwhile, India reduced its fertilizer demand estimate for the kharif season after the weather office downgraded its monsoon forecast. The India Meteorological Department (IMD) revised its 2026 south-west monsoon forecast to 90% of the long-period average (LPA), down from 92%, prompting the department of agriculture and farmers’ welfare to pare the overall fertilizer requirements to 38.39 mt from an earlier 39.05 mt. Urea demand has been trimmed by roughly 400,000 tonnes to 19 mt, while diammonium phosphate (DAP) demand was cut to 5.62 mt from 5.91 mt.
India imported 5.65 mt of urea, 4.57 mt of DAP, and 2.27 mt of NPK fertilizers in 2024-25. While urea continues to dominate domestic fertilizer production and accounts for nearly 55% of total consumption, the country remains dependent on imports for around 15% of its urea requirement. In contrast, NPK fertilizers contribute about 20% to overall consumption, while DAP remains heavily import-dependent, with nearly 60% of domestic demand met through overseas purchases.