Cabinet Approves Higher Fertilizer Subsidy Of ₹41,534 Crore For 2026 Kharif

(MENAFN- Live Mint) NEW DELHI: The Union cabinet on Wednesday approved nutrient-based subsidy (NBS) rates worth about ₹41,533.81 crore for phosphatic and potassic (P&K) fertilizers for the upcoming kharif season, raising support as global fertilizer prices remain volatile.

The budgetary requirement for the kharif fertilizer subsidy in 2026 is about ₹4,317 crore higher than the ₹37,216.15 crore allocated for kharif 2025. It is also roughly ₹3,582 crore more than the subsidy requirement for the rabi 2025-26 season.

"Under the Nutrient Based Subsidy (NBS) scheme for our 'Annadatas' and farmer brothers, a complete subsidy programme worth ₹41,534 crore has been approved today for farmers for the Kharif season," Union minister Ashwini Vaishnaw told reporters after the cabinet meeting.

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The increase in allocation is aimed at ensuring fertilizers remain available to farmers at affordable prices even as international prices of key inputs such as diammonium phosphate (DAP) and muriate of potash (MOP) remain elevated.

The war in West Asia has added to supply uncertainties in fertilizer and energy markets.

India is the world's largest importer of diammonium phosphate and a major buyer of other fertilizers. As the second-largest agricultural producer globally, it meets around 60% of its DAP requirement and about 15% of its urea and NPK fertilizer demand through imports.

West Asia meets about 30% of India's urea needs, 30% of di-ammonium phosphate (DAP) demand and 50% of LNG (liquefied natural gas) requirement, which is used for production of fertilizers.

The government currently provides 28 grades of phosphatic and potassic fertilizers, including DAP, to farmers at subsidized rates through manufacturers and importers under the nutrient-based subsidy scheme, which has been in force since April 2010.

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"An increase in NBS acts as both a price shield and productivity booster, helping farmers manage costs while sustaining crop output. Higher subsidy means the government bears a larger share of the cost, keeping retail prices of fertilizers like DAP and NPK stable or lower despite global price rises," said Devender Sharma, a farm policy expert.

The subsidy rates approved for the kharif 2026 season will be applicable from 1 April 2026 to 30 September for phosphatic and potassic fertilizers, including DAP and various NPKS grades. The subsidy will be released to fertilizer companies based on the notified rates to ensure farmers continue to receive fertilisers at reasonable prices.

The government has projected a total fertilizer subsidy of ₹1.71 trillion for FY27, lower than the revised estimate of ₹1.86 trillion for FY26 as it seeks to tighten overall spending.

Other decisions

The Union cabinet also approved the revision of project cost of HPCL Rajasthan Refinery Ltd, from ₹43,129 crore to ₹79,459 crore, along with an additional equity investment of ₹8,962 crore by Hindustan Petroleum Corp. Ltd.

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It also cleared two hydroelectric projects in Arunachal Pradesh - the ₹26,069.50 crore Kamala Hydro Electric Project and the ₹14,105.83 crore Kalai-II Hydro Electric Project.

Additionally, it approved Jaipur Metro Phase-2, a 41-km north–south corridor with 36 stations, at a total project cost of ₹13,037.66 crore.

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