Fertilizer prices are once again on the rise, creating fresh challenges for India—the world’s second-largest consumer and third-largest producer of fertilizers. According to the World Bank, the global fertilizer price index rose 15 percent in the first half of 2025, with triple superphosphate (TSP) and diammonium phosphate (DAP) recording steep gains of 43% and 23%, respectively. For India, which relies heavily on imports of DAP, potash, and phosphatic rock, these global shifts are reshaping procurement costs, subsidy burdens, and farm-level affordability.
Global Drivers with Local Impact
The price rally is being fueled by:
• Strong demand during peak cropping cycles in Asia.
• Export restrictions by China, which cut nitrogen fertilizer shipments by 90% in 2024 and continued restrictions in 2025.
• Geopolitical sanctions on Belarus and tariffs on Russia, disrupting potash and nitrogen supply chains.
• Higher sulphur prices, a critical input in phosphatic fertilizer production, which have tripled since late 2024.
For India, these global shifts translate directly into higher import bills. Nearly 25% of India’s urea, 100% of its potash, and over 60% of phosphates are import-dependent. This makes the country highly vulnerable to supply disruptions and global price volatility.
Gas, Ammonia, and the Cost of Nitrogen Fertilizers
Natural gas, a feedstock for urea, has seen price moderation in the US and Europe (down 26% and 16% since early 2025). Ammonia prices have also softened. However, India’s reliance on imported LNG means local production costs remain high, although domestic gas allocations for urea plants provide some cushion.
Affordability Pressure on Farmers
Despite global natural gas easing, fertilizer affordability in India has worsened. The DAP affordability index has breached its 2022 crisis levels, while affordability for urea and muriate of potash (MOP) has also declined. This comes at a time when global crop prices are weakening, squeezing farmer margins. The Indian government has already expanded its fertilizer subsidy allocation for FY 2025–26 to over ₹2.5 lakh crore, but the strain on public finances continues.
Outlook for 2025–26
The World Bank projects global fertilizer prices to rise 7% in 2025 before stabilizing in 2026. For India:
• Urea: Prices are expected to rise 15% in 2025, before falling 4% in 2026 as new capacity comes online in the Middle East and East Asia. Domestic production expansion under the “Atmanirbhar Bharat Urea Mission” will cushion part of the impact.
• DAP: Prices may climb 6% this year, before easing 8% in 2026. India’s heavy reliance on imports from West Asia, Russia, and Morocco makes it especially vulnerable.
• Potash (MOP): Projected to rise 5% in 2025, stabilizing in 2026. India’s supply is tied to long-term contracts with Belarus, Canada, and Israel, but sanctions and trade rerouting are increasing costs.
Structural Shifts and India’s Policy Response
The long-term challenge for nitrogen fertilizers lies in their high carbon footprint. Globally, this could accelerate shifts toward low-emission and organic alternatives. For India, this aligns with government initiatives to:
• Promote nano-urea, organic urea, and organic DAP.
• Invest in CBG (Compressed Biogas) plants that produce Fermented Organic Manure (FOM) and Phosphorus Rich Organic Manure (PROM) as substitutes.
• Reduce subsidy dependence by scaling domestic capacity and promoting balanced fertilizer use.
Bottom Line for India
Fertilizer markets remain volatile in 2025. While global supply is expected to stabilize by 2026, India’s import dependency leaves it exposed to geopolitical risks and price shocks. The immediate challenge is affordability for farmers, while the long-term solution lies in self-reliance, diversification of imports, and scaling organic and bio-based fertilizers.
India’s path forward will require balancing short-term price stabilization with long-term sustainability and soil health improvement.
