According to Union Budget 2026-27, Rs 1.7 lakh crore has been earmarked for fertilizer subsidy in the next fiscal. This is higher than the revised estimate of Rs 1.67 lakh crore for 2025-26 for the ongoing financial year. The government had earmarked Rs 1.71 lakh crore towards fertiliser subsidy in the previous year.
The allocation comes a month after Union Fertilizer Minister Jagat Prakash Nada inaugurated an integrated e-bill system that will enable the government to process fertilizer subsidies worth approximately Rs 2 lakh crore. The system marks a shift from manual, paper-based processes to a fully digital workflow, eliminating the physical movement of bills.
The Fertilizer Association in the budget had suggested rationalisation of customs duties on key raw materials, incentives for downstream projects, and bringing urea under the nutrient-based subsidy framework, reported PTI.
The FAI had demanded exemption or reduction of basic customs duty on inputs such as ammonia, phosphoric acid, sulphuric acid, rock phosphate and sulphur. It has also sought relief from Agriculture Infrastructure and Development Cess, and resolution of issues arising from inverted GST duty structures leading to accumulation of unutilised input tax credit.
The industry had underscored the need for sustained policy support to encourage fresh investments in indigenous phosphatic and potassic fertiliser capacity, backward integration projects, and strategic overseas sourcing, in line with Aatmanirbhar Bharat and Make in India objectives.
The industry had urged the government to consider targeted policy and fiscal measures to strengthen India’s fertiliser security, promote balanced nutrient use, and support domestic manufacturing.
Sustained volatility in international prices of key fertiliser inputs such as rock phosphate, phosphoric acid, ammonia, potash and sulphur, driven by geopolitical tensions, supply chain disruptions and export restrictions by major producing countries, has increased production costs and import dependence.
While timely government interventions, including supply arrangements with Morocco, Saudi Arabia and Qatar, have helped secure availability, continued uncertainty in global markets has impacted investment sentiment.
READ MORE: Budget 2026 Live Updates: Markets Sour After Sitharaman Hikes STT On F&O, Lower Capex Than Estimates
