India’s fertiliser sector in 2025 balanced soaring demand, strategic imports, domestic capacity expansion, and sustainability initiatives, setting the stage for a resilient 2026

In 2025, India’s fertiliser sector found itself at a pivotal juncture, shaped by vigorous policy efforts, mounting import pressures, structural bottlenecks, and emerging sustainability agendas. As agriculture remained the backbone of the rural economy — supporting over 140 million farming households at nearly 70 million tonnes of annual fertiliser use — 2025 was a year in which old challenges met new imperatives. Fertilisers, far from mere inputs, became emblematic of India’s quest for agricultural self‑reliance, fiscal prudence, and technological modernisation.

NBS in 2025: Lifeline and Debate

If anything defined the agenda in 2025, it was the continued importance of government support through the Nutrient Based Subsidy (NBS) system. Before the Kharif and Rabi seasons, the Union Cabinet approved substantial subsidy allocations to ensure fertilisers remained affordable at the farm gate. For the 2025–26 Rabi season, the government sanctioned Rs 37,952 crore under the NBS framework, marking a notable rise from previous years as it compensated for surging global input costs, especially for phosphatic and sulphur‑containing fertilisers. Subsidy rates were fixed for nitrogen, phosphorus, potash, and sulphur at levels that reflected international price trends, ensuring farmers did not shoulder the burden of escalating import costs.

Subsidies today remain a fiscal juggernaut: official data show that in 2024‑25, more than Rs 1.9 lakh crore was provided in combined urea and nutrient‑based subsidies, highlighting the government’s commitment to stabilising cost structures for growers amid volatile global markets.

Yet subsidy policy is no longer seen merely as a safety net — it’s also a subject of reform debates. Industry associations and fertiliser manufacturers called for subsidy reforms, GST relief, and extension of NBS to urea, arguing that the current regime, though essential, introduces distortions and disincentivises private investment. These voices emphasised that while subsidies keep prices low for farmers, they exert pressure on public finances and can disincentivise domestic production and innovation — a delicate balance policymakers must navigate.

Import Reliance Under the Spotlight

Domestic fertiliser production remains the bedrock of India’s agrarian input system. In 2025, the sector continued to expand capacity, particularly in urea — the most widely used nitrogenous fertiliser. Over the previous six years, India commissioned six new urea plants adding 76.2 LMT (lakh metric tonnes) of capacity, reinforcing its position as the world’s second‑largest consumer and a top producer of fertilisers.

“India’s fertiliser industry saw robust growth in the first half of fiscal 2025, driven by 8 per cent above-normal rainfall and an early southwest monsoon, which accelerated sowing of paddy and maize. Fertiliser sales rose sharply—urea ~15 per cent, MOP 10 per cent, DAP 9 per cent, and NPK complexes 9 per cent—despite supply-side challenges such as depleted inventories, rising global prices, and export restrictions from China. In response, the government increased NBS rates for phosphorus by 10 per cent for the Rabi season, after a 42 per cent hike during Kharif, making DAP production and imports more attractive. Urea and DAP imports surged to record highs—urea up 138 per cent (17 LMT → 40 LMT) and DAP up 94 per cent (20 LMT → 38 LMT).

Indian fertiliser firms IPL, KRIBHCO, and CIL secured an annual 3.1 million-tonne DAP supply from Saudi Arabia’s Ma’aden, while Indian Railways boosted rake movements by 11.7 per cent. Supplementary government subsidies exceeding Rs 18,000 crore ensured uninterrupted availability. Acreage of horticulture crops such as potato and banana is also projected to rise 1-2 per cent and 2-3 per cent, respectively, which is likely to boost consumption of non-urea fertilisers. However, this growth will be constrained by a decrease in the acreage of rapeseed and mustard due to unseasonal rainfall in October, as well as in vegetables because of lower price realisations during the 2026 rabi marketing year.”

— Pushan Sharma, Director, Crisil Intelligence

A landmark moment came in December 2025, when Prime Minister Narendra Modi laid the foundation stone for a Rs 10,601 crore ammonia‑urea fertiliser plant in Assam’s Dibrugarh district. This investment — one of the largest in recent fertiliser infrastructure — is more than industrial expansion; it is a statement of intent: to strengthen regional production, reduce logistical costs, generate employment, and diminish dependency on imported ammonia and finished fertilisers.

Yet production trends were not uniformly positive across all nutrient segments. While urea output has been bolstered by capacity additions and policy support, domestic output of DAP and several complex fertiliser grades has struggled to keep pace with demand, necessitating heavy import reliance, particularly for phosphatic and potassic nutrients.

Diversifying the Basket: From Russia to the West

India’s dependence on fertiliser imports remained one of the sector’s most consequential themes in 2025. According to the Fertiliser Association of India (FAI), fertiliser imports were projected to soar 41 percent in FY26 to around 22.3 million tonnes, largely driven by unexpectedly strong domestic demand after favourable monsoon rains. This surge included sharp rises in urea and complex fertiliser imports, even as domestic production grew marginally.

While import volumes soared, stocks remained adequate, and officials maintained that there were no supply constraints per se — though the surge signalled structural dependence on foreign suppliers for key nutrients.

Dependence on external supply chains was thrown into sharper relief by China’s effective suspension of speciality fertiliser exports to India in certain months of 2025. India imports a significant share (close to 95 percent) of speciality fertilisers — including water‑soluble fertilisers and micronutrient blends essential for high‑value horticultural crops — from China. The abrupt halt, effected through inspection delays rather than formal bans, highlighted the vulnerability of India’s supply ecosystem to geopolitical and procedural disruptions, and fuelled concerns about price surges and supply continuity, especially ahead of the Rabi season.

Industry data also indicate that imports from alternate sources surged to counterbalance Chinese curbs. Diversification efforts saw Indian firms sourcing water‑soluble and specialty fertilisers from countries such as Belgium, Germany, Egypt, Morocco, and the United States — a strategic adaptation that has helped maintain availability even as China’s export intermissions persisted.

Notably, Russia continued to emerge as a major supplier. By late 2025, Russian fertiliser exports to India were on track to reach 5.5 million tonnes, reinforcing Russia’s status as a key partner and diversifying India’s import basket — especially for phosphate‑based products.

Water-Soluble Breakthroughs: India’s R&D Milestone

Beyond volumes and supply, 2025 saw the fertiliser sector engaging more deeply with sustainability and nutrient efficiency. Traditional fertilisers are resource‑intensive and have well‑documented environmental externalities; responding to this, policymakers and industry stakeholders spent part of the year exploring precision nutrient management and climate‑aligned fertiliser technologies.

The FAI’s annual seminar on green nutrient management brought together policymakers, industry experts, and scientists to deliberate integrated nutrient strategies that improve soil health and reduce environmental impact. Such dialogues reflect a growing recognition that fertiliser policy must evolve beyond subsidy and supply concerns to embrace sustainable agricultural practices.

Additionally, domestic innovation made inroads into segments traditionally dominated by imports. India’s first indigenous technology for water‑soluble fertiliser development demonstrated that homegrown innovation can reduce import dependency and catalyse new industry investment — an important precedent for future R&D efforts.

Structural Challenges & Calls for Reform

Despite significant policy backing and capacity expansions, the fertiliser sector in 2025 grappled with persistent structural issues. Chief among them was the role of regulatory frameworks that industry groups argue inadvertently favour imports over domestic production. Critics contend that outdated fertiliser regulations and inconsistent policy signals can dissuade investment in domestic manufacturing and compromise the “Make in India” agenda.

The subsidy regime, while crucial, has also drawn scrutiny. Long‑term fiscal sustainability is a concern as global input costs remain elevated and subsidy outlays approach ~Rs 2 lakh crore for the year. Analysts warn that such large subsidies, if not complemented by efficiency gains and targeted reforms, could strain public resources without necessarily delivering proportional productivity boosts.

Black‑marketing and quality enforcement issues in the distribution chain were highlighted at the state level, prompting calls for tighter monitoring and digital tracking mechanisms to ensure fertiliser quality and equitable access.

Navigating 2026: Strategic Imperatives

Looking toward 2026, the fertiliser sector confronts a multi‑dimensional agenda.

First, there is a pressing need to anchor domestic production of complex and speciality fertilisers, moving beyond urea dominance. This requires incentives for investment, streamlined regulatory pathways, and technology partnerships to build capacity for advanced nutrient formulations.

Second, diversifying import sources remains strategic. Stronger supply ties with Russia, Middle Eastern producers, and other global players not only hedge against geopolitical risk but also expand India’s negotiating leverage in global markets.

Third, policy reforms must balance subsidy support with market viability. Extending the NBS framework to cover more nutrient types — while rationalising subsidy mechanisms to reward efficiency and innovation — could make the sector more resilient and less dependent on fiscal largesse.

Fourth, sustainability imperatives cannot be sidelined. Embedding precision nutrient management, soil health analytics, and environmentally aligned fertiliser technologies into mainstream practice will boost long‑term agricultural resilience while reducing ecological footprints.

Finally, there is a narrative for strategic self‑reliance — not isolation. The sector’s future lies in marrying domestic capacity with open, diversified global engagement, ensuring that Indian agriculture remains competitive, secure, and sustainable.

From Turbulence to Transformation: India’s Fertiliser Journey

In 2025, India’s fertiliser sector embodied the complexities of an agricultural superpower in transition. Amid surging demand and global supply turbulence, policy support held the system together, while strategic production investments, import diversification, and sustainability dialogues shaped a forward‑looking agenda. The challenges are formidable — from subsidy sustainability to regulatory reform and supply security — but so are the opportunities. As India charts its fertiliser roadmap for 2026 and beyond, the sector’s evolution will be pivotal to the broader narratives of agricultural growth, rural prosperity, and climate‑adapted farming.

— Suchetana Choudhury (suchetana.choudhuri@agrospectrumindia.com)