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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS AND FERTILIZERS
DEPARTMENT OF FERTILIZERS
LOK SABHA
UNSTARRED QUESTION NO.2268 TO BE ANSWERED ON 31.07.2026
Fertilizer Subsidy Policy
2268. Shri Sachithanantham R:
Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:
(a) whether the Government has taken note that reducing fertilizer
subsidies without regulating fertiliser manufacturers has increased input
costs for farmers and benefited fertilizer companies, if so, the details
thereof;
(b) whether the Government has conducted any study on the extent to
which fertilizer subsidy burden of the country is mainly due to dependence
on imports and inadequate public investment in domestic fertiliser
production, rather than the subsidy itself, if so, the details thereof; and
(c) whether the Government proposes to strengthen public sector
fertilizer production to reduce import dependence, if so, the details
thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF CHEMICALS & FERTILIZERS
(SMT. ANUPRIYA PATEL)
(a) to (c): The Government has implemented Nutrient Based Subsidy (NBS)
Scheme w.e.f. 01.04.2010 for Phosphatic and Potassic (P&K) Fertilizers. Under
the Scheme, P&K fertilizers are covered under Open General License (OGL)
and companies are free to import/manufacture these fertilizers as per their
business dynamics. To meet any potential increase in fertilizer subsidy
requirements arising from global market uncertainties, the Government hasapproved a subsidy allocation of ₹41,533.81 crore under the Nutrient Based
Subsidy (NBS) Scheme for the Kharif 2026 season, which is approximately
₹3,581 crore higher than the subsidy requirement approved for the Rabi 2025-
26 seasons. This enhanced allocation will help maintain the affordability and
availability of P&K fertilizers for farmers.
To reduce dependence on imported Phosphatic fertilizers and make
country self-reliant, measures have been taken to encourage domestic
production through guidelines dated 18.01.2024 on reasonable MRP, wherein
importers/ manufacturers are given reasonable profit of 8%, 10% and 12%
respectively. Based on the requests, the new manufacturing capacity of
existing units have been recognized / taken on record under the NBS Scheme.
The number of P&K fertilizers covered under NBS Scheme increased from 22
grades in 2018 to 28 grades. Freight Subsidy on SSP which is an indigenously
manufactured fertilizer, is being provided since Kharif 2022 to promote SSP
usage for providing Phosphatic or ‘P’ nutrient to the soil. Further the rates of
nutrients under NBS scheme are decided on biannual basis to ensure
availability of fertilizers under the Scheme.
Further, under the Urea Subsidy Scheme, Urea is provided to the farmers
at a statutorily notified Maximum Retail Price (MRP). The MRP of 45 kg bag of
urea is Rs.242 per bag (exclusive of charges towards neem coating and taxes
as applicable). The difference between the delivered cost of urea at farm gate
and net market realization by the urea units is given as subsidy to the urea
manufacturer/importer by the Government of India. Accordingly, all farmers are
being supplied urea at the subsidized rate.
The Government had announced New Investment Policy (NIP) – 2012 on
2nd January, 2013 and its amendment on 7th October, 2014 to facilitate fresh
investment in the urea sector and to make India self-sufficient in the urea sector.
Total 6 new urea units have been set up under NIP-2012 which includes 4 ureaunits set up through Joint Venture Companies (JVC) of nominated PSUs and 2
urea units set up by the private companies. The units set up through JVC are
Ramagundam urea unit of Ramagundam Fertilizers and Chemicals Ltd (RFCL)
in Telangana and 3 urea units namely Gorakhpur, Sindri and Barauni of
Hindustan Urvarak & Rasayan Limited (HURL) in Uttar Pradesh, Jharkhand and
Bihar, respectively. The units set up by private companies are Panagarh urea
unit of Matix Fertilizers and Chemicals Ltd. (Matix) in West Bengal; and
Gadepan-III urea unit of Chambal Fertilizers and Chemicals Ltd. (CFCL) in
Rajasthan. Each of these units has installed capacity of 12.7 Lakh Metric Tonne
per annum (LMTPA). These units are highly energy efficient as they are based
on latest technology. Therefore, these units have together added urea
production capacity of 76.2 LMTPA, thereby total indigenous urea production
capacity (Reassessed Capacity, RAC) has increased from 207.54 LMTPA
during 2014-15 to 283.74 LMTPA during 2023-24. Further, an exclusive policy
for the revival of Talcher unit of FCIL through JVC of nominated PSUs namely
Talcher Fertilizers Limited (TFL) by setting up a new Greenfield Urea plant of
12.7 LMTPA at coal gasification route has also been approved. Recently, the
Union Cabinet has approved the proposal for setting up of a new Brownfield
Ammonia-Urea Complex of 12.7 Lakh Metric Tonnes (LMT) annual capacity of
Urea production within the existing premises of Brahmaputra Valley Fertilizer
Corporation Limited (BVFCL), Namrup, Assam namely Assam Valley Fertilizer
and Chemical Company Ltd. (AVFCCL).
The Cabinet Committee on Economic Affairs (CCEA) approved the
National Investment Policy for Urea-2026 for Atmanirbhar Bharat on
15.07.2026. Under the policy, provisions have been made to encourage
investment for setting up new gas-based urea manufacturing units in the
country, with a view to enhancing domestic urea production capacity, reducing
dependence on imported urea, and strengthening self-reliance in the availability
of urea.
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