Government Pushes for Collective Global Buying in Fertiliser Sector

The Government has reportedly asked Fertiliser Companies to consider buying finished products and raw materials together rather than placing separate orders, as per news reports.  

The suggestion follows the system already used for urea imports, where demand is pooled to negotiate supply. 

The advice comes at a time when global supply chains have been affected by the West Asia situation, leading to tighter availability in key markets. 

Prices Increase Across Fertilisers 

Costs of major fertilisers such as urea, diammonium phosphate (DAP), muriate of potash (MoP) and NPK blends have moved up in recent months.  

Inputs including ammonia, sulphur, rock phosphate, and phosphoric acid have also become more expensive. 

Market participants estimate that prices in these segments have risen by 50-60% due to lower supplies. This has made imports more expensive for domestic buyers. 

Initial Step Through Industry Tender 

A joint procurement effort was seen recently when Indian Potash Ltd issued a tender to import 1.6 million tonnes of DAP and triple super phosphate. The order was placed on behalf of multiple companies. 

Such tenders are expected to be used more often if companies shift to collective sourcing. 

Higher Imports Planned Before Kharif 

The government plans to import more than 8 million tonnes of fertilisers ahead of the kharif sowing season. This includes 6.4 million tonnes of urea and about 1.9 million tonnes of other fertilisers. 

Recent purchases show the change in prices. India bought 2.5 million tonnes of urea at nearly $950 per tonne, compared with about $530-550 per tonne for 1.3 million tonnes contracted earlier this year. 

Subsidy Burden Expected to Rise 

With higher import costs, the fertiliser subsidy is likely to increase. Estimates suggest the FY27 outlay could cross ₹2 lakh crore, above the Budget estimate of ₹170,781 crore. 

In FY26, the revised estimate stood at ₹186,460 crore, while actual spending is expected to have crossed ₹217,000 crore. The last time the subsidy crossed ₹2 lakh crore was in FY23. 

Other Discussions Underway 

Separately, the government is reviewing the 11% Customs duty on raw cotton imports. Ministries concerned are examining whether a reduction is possible. 

Read More: TRAI Extends Comment Deadline to May 5 on Proposal for Lower-Priced Voice-Only Plans! 

Conclusion 

With global prices remaining high, the focus has shifted to securing supplies through coordinated imports. The approach is expected to influence procurement patterns in the coming months. 

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