Ahead of the Union Budget 2026–27, the Fertiliser Association of India (FAI) has urged the government to consider targeted policy and fiscal measures to strengthen India’s fertilizer security, promote balanced nutrient use, and support domestic manufacturing in line with the vision of Atmanirbhar Bharat.
In a press release, FAI noted that India’s record food grain production of 358 million tonnes in 2024–25 underscores the critical role of fertilizers in sustaining agricultural growth. To maintain this momentum, the industry emphasized improving nutrient use efficiency, promoting modern agricultural technologies, and ensuring a stable and predictable policy environment amid rising input costs and climate variability.
Input Price Volatility Raises Cost Pressures
The industry highlighted sustained volatility in international prices of key fertilizer inputs such as rock phosphate, phosphoric acid, ammonia, potash, and sulfur. Driven by geopolitical tensions, supply chain disruptions, and export restrictions by major producing countries, these factors have increased production costs and import dependence. While timely government interventions, including supply arrangements with Morocco, Saudi Arabia, and Qatar, have helped secure availability, continued uncertainty in global markets has dampened investment sentiment.
Dr. Suresh Kumar Chaudhari, Director General, FAI, said sustained fertilizer security depends on balancing affordability for farmers, financial viability for manufacturers, and investment continuity. He emphasized that predictable subsidy frameworks, rational taxation, and timely policy interventions are essential to ensure uninterrupted nutrient availability while supporting efficient and sustainable fertilizer use.
Push for Domestic Capacity
FAI underscored the need for sustained policy support to encourage fresh investments in indigenous phosphatic and potassic fertilizer capacity, backward integration projects, and strategic overseas sourcing, aligned with Atmanirbhar Bharat and Make in India objectives. The industry also highlighted the need for targeted incentives for acid and complex fertilizer plants to improve efficiency, reduce emissions, and address phosphogypsum disposal challenges by promoting its use in construction, soil amendment, and industrial applications.
Tax and GST Rationalization Sought
On the taxation front, the fertilizer industry has sought rationalization of customs duties and GST provisions affecting key raw materials. Key demands include exemption or reduction of basic customs duty on inputs such as ammonia, phosphoric acid, sulfuric acid, rock phosphate, and sulfur; relief from the Agriculture Infrastructure and Development Cess; and resolution of inverted GST duty structures that result in the accumulation of unutilized input tax credit.
The industry has also recommended direct tax measures, including restoration of weighted deductions for R&D and farmer education, incentives for downstream fertilizer projects, accelerated depreciation for energy-efficient equipment, and easing compliance and litigation burdens.
Need to Correct Nutrient Imbalance
FAI further emphasized the need to promote balanced fertilization to protect soil health, noting that disparities between urea and P&K fertilizer prices have led to an imbalanced N:P:K consumption ratio. Bringing urea under the nutrient-based subsidy framework, along with promoting innovative fertilizer products, bio-fertilizers, integrated nutrient management, and initiatives such as PM-PRANAM, would help correct price distortions and support sustainable farming practices.