India’s agricultural sector, the backbone of its economy and a lifeline for millions, is once again confronting a critical challenge in its fertilizer supply strategy. Despite a concerted policy push towards enhancing domestic production and reducing reliance on external markets, the nation has witnessed a dramatic surge in fertilizer imports during the current fiscal year. This escalating dependence not only strains public finances through ballooning subsidies but also raises profound questions about long-term soil health, agricultural sustainability, and the broader vision of self-sufficiency, or ‘atmanirbharta’, in critical farm inputs.
The latest figures paint a stark picture of this rebalancing towards imports. Data from the Fertilizer Association of India (FAI) indicates that between April and November of the current financial year (FY26), urea imports skyrocketed by an alarming 120% year-on-year, reaching an estimated 7.2 million tonnes. This surge occurred even as domestic urea production experienced a modest decline of 3.7% over the same period, signaling a growing disconnect between local output capacity and escalating farm demand. The import trend extends beyond urea; di-ammonium phosphate (DAP), another crucial nutrient, saw its imports rise by 54% to 5.5 million tonnes, while complex NPK (Nitrogen, Phosphorus, Potassium) fertilizer imports nearly doubled to 2.7 million tonnes. FAI officials have underscored that this import reliance is no longer merely supplementary but has become a structural feature of India’s fertilizer supply chain, reflecting an inability of domestic capacity to keep pace with the nation’s agricultural needs.
This sharp pivot towards imports represents a significant setback to India’s ambitious goal of achieving fertilizer self-sufficiency. In 2020, the then-Fertilizer Minister D. V. Sadananda Gowda had articulated a clear roadmap for ‘atmanirbharta’ by 2023, driven by the revival of defunct urea plants, the commissioning of new facilities, and the adoption of innovative technologies like nano urea. Significant strides were indeed made, with India successfully reducing its urea import dependence from approximately 28% of domestic consumption in FY21 to about 15% by FY25. However, the current fiscal year’s unprecedented spike in demand has disrupted this positive trajectory. The share of domestic production in meeting India’s total fertilizer consumption, which stood at a robust 77% in FY25, has plummeted to 64% in the first eight months of FY26. This shortfall has tangible consequences, as evidenced by reports of farmers in several states facing acute shortages, enduring long queues, and even resorting to purchasing fertilizers at inflated prices in grey markets, directly impacting their planting schedules and economic viability.
The escalating import dependency has a direct and substantial impact on the national exchequer through an ever-increasing fertilizer subsidy bill. Total fertilizer subsidies have swelled dramatically from approximately ₹81,124 crore in FY20 to an estimated ₹1.83 trillion in the revised estimates for FY25. This staggering increase represents a significant drain on public funds, with nearly 70% of this outlay allocated to urea. The subsidy mechanism ensures that urea is sold to farmers at less than a tenth of its actual cost, making it exceptionally affordable. While intended to support farmers and boost agricultural output, this deep subsidy has an unintended consequence: it incentivizes the excessive and often imbalanced use of nitrogen-heavy fertilizers relative to other essential nutrients like phosphorus and potassium. This distortion in nutrient application is a critical concern for soil health and agricultural sustainability.
Several factors have converged to drive the sharp increase in fertilizer demand during FY26. A pivotal element has been the expansion of cropped area, particularly during the Kharif (monsoon) season, supported by ample and well-distributed rainfall across various regions. Farmers responded to favorable weather conditions by expanding acreage under key crops such as corn and rice, consequently boosting the demand for both urea and DAP. The robust sowing of wheat during the ongoing Rabi (winter) season is anticipated to further elevate fertilizer consumption. This trend is not isolated; overall urea consumption in India has shown a consistent upward trajectory, climbing from approximately 31 million tonnes in FY14 to an estimated 40 million tonnes in FY26. This long-term growth is attributable to factors like population growth, intensive farming practices to maximize yields from limited land, and, critically, the skewed economics of subsidized fertilizers.
The imbalanced application of chemical fertilizers, largely driven by the affordability of urea, poses a severe threat to India’s soil health and long-term agricultural productivity. Studies conducted by the Indian Council of Agricultural Research (ICAR) have repeatedly highlighted that the excessive use of nitrogenous fertilizers, coupled with declining organic matter content and the effects of climate change, are primary contributors to widespread soil degradation. The Ministry of Agriculture itself has noted that an over-application of nitrogen can paradoxically lower crop yields over time by creating nutrient imbalances, exacerbating soil acidity, and reducing the soil’s natural fertility and microbial activity. Furthermore, this practice contributes to environmental pollution through nitrate leaching into groundwater and nitrous oxide emissions. A Parliamentary Standing Committee, in a report submitted in December, emphasized the urgent need for comprehensive farmer training programs to promote balanced nutrient use, encourage crop rotation, and foster the adoption of natural farming practices. However, industry experts frequently point out that unless the pricing distortions for urea are addressed through a recalibration of subsidies, farmers will continue to prioritize the cheapest available nutrient, perpetuating the imbalanced application cycle.
Addressing this multifaceted challenge requires a holistic and integrated policy approach. On the supply side, sustained investment in domestic manufacturing capacity, utilizing advanced technologies and ensuring a reliable supply of raw materials, is paramount. The revival of old urea plants and the push for innovative solutions like nano urea, which promises higher nutrient use efficiency, are steps in the right direction, but their widespread adoption and impact need to be scaled up. On the demand side, reforming the fertilizer subsidy regime to promote balanced nutrient application is crucial. This could involve shifting towards nutrient-based subsidies for all fertilizers, or implementing direct benefit transfers more effectively, while simultaneously educating farmers about the benefits of soil testing and integrated nutrient management. Global best practices, such as those in countries that have successfully diversified their fertilizer portfolios or implemented robust soil health card programs, offer valuable lessons. Ultimately, India’s agricultural future hinges on its ability to reconcile the immediate needs of its farming community with the long-term imperative of sustainable soil health and fiscal prudence, navigating away from a structural import dependency towards genuine ‘atmanirbharta’.
