India approves P and K subsidy for kharif 2025

Market: Fertilizers
28/03/25

The Indian government has approved the nutrient-based subsidy for phosphates and potash fertilizers for the kharif season, which runs from April until September.

It has approved a total budget of 372.16bn rupees ($4.35bn) for the kharif season, which is 130bn rupees higher than the subsidy for rabi 2024-25 and around 128bn rupees higher than the allocation for kharif last year.

The government said that the increased subsidy reflects the recent trends in international prices of fertilizers and inputs.

The new rates are largely in line with the proposal made by the Inter-Ministerial Committee (IMC) in February, although the rate for DAP is slightly lower than the initial proposals as are the rates for the NPK grades, which moved according to the hike in the rate for P2O5.

The subsidy for MOP will remain at Rs2.38/kg, unchanged on the level for the rabi season as proposed in September. This will give a per tonne subsidy rate for MOP of Rs1,428.

The subsidy for phosphate will rise by 42pc from Rs30.80/kg for the rabi season to Rs43.60/kg. The subsidy for nitrogen will remain at Rs43.02/kg. This will give a per tonne subsidy rate for DAP of Rs27,799, a rise of Rs5,888/t from the base subsidy for rabi, slightly lower than the expected rise of around Rs6,000/t.

The government will probably extend the Rs3,500/t special additional subsidy for DAP into kharif, bringing the total subsidy for DAP up to Rs31,299/t. The maximum retail price for DAP will remain at Rs27,000/t.

At current market prices, DAP importers' margins will remain negative. The government will probably continue to compensate importers for losses on DAP, but there is no indication that Indian DAP producers will also receive compensation for losses.

The rates for NPK grades have moved up according to the hike in the rate for P2O5. The new subsidies are as follows for the following key import grades when compared with the rates for rabi:

10-26-26 - Rs16,257/t, up by 26pc
20-20-0+13 – Rs17,663/t, up by 18pc
12-32-16 – Rs19,495/t, up by 27pc
15-15-15+9S – Rs13,585/t, up by 19pc

A total of 28 fertilizer grades are included in the scheme.

By Julia Campbell and Tom Hampson

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