Synopsis
- Fertiliser consumption is expected to grow by 2%-3% in FY25 due to an above-normal monsoon this year, adequate reservoir level, timely upward revision in Minimum Support Prices (MSPs) for major Kharif & Rabi crops, and increased area under cultivation.
- Prices of major raw materials for fertilisers have rationalised post the sharp increase witnessed in FY23. Natural gas prices have also declined after a sudden spike post-the outbreak of the Russia-Ukraine war.
- While India is gradually moving towards self-sufficiency in its highly consumed fertiliser viz., Urea, the import dependency remains high for complex fertilisers.
- Di-ammonium phosphate (DAP) is the second-highest consumed fertiliser in India after Urea, with close to half of India’s consumption requirement met through imports. During H1FY25, the production of DAP, and especially its imports, has reduced significantly on a y-o-y basis, resulting in lower availability of DAP this year just before the onset of Rabi sowing season.
- The government’s subsidy budget for FY25 stands at Rs 1.64 lakh crore, which is ~16% lower than FY24, mainly due to reduced raw material and gas prices. Further, there is a recent upward revision in original NPK subsidy budget by ~Rs.6600 crore in December 2024. With this, the subsidy budget is expected to be largely sufficient for FY25.
