India could face a shortage of urea this year as consumption continues to grow at an unusually fast pace. The rapid increase in usage is becoming a major challenge for the government. Every year, urea consumption rises by more than the capacity addition of a new urea plant. In the current fiscal (2025-26), the country’s urea consumption is expected to cross 40 million tonnes, which is nearly 10 million tonnes higher than domestic production.
A strong monsoon and urea being available at less than half the price of other fertilisers are among the main reasons for this surge in demand. With a better-than-normal monsoon this year, the acreage under rabi crops is likely to rise, especially crops that require higher urea input. However, the current rabi season began with lower opening stock. Against 6.3 million tonnes of stock on 1 October 2024, urea stock this year on 1 October 2025 was just 3.7 million tonnes — nearly 2.6 million tonnes lower.
Reports of shortage were also seen during the kharif season in many parts of the country. Lower opening stock could further affect availability during rabi. While many new fertiliser plants have come up over the last few years — including in both public sector and private sector — production is still unable to keep pace with rising consumption. Production has also stopped at two private sector urea plants, adding further pressure.
In the first six months of this fiscal, urea consumption has already grown by 2.1%. Last year (2024-25), consumption had touched a record 38.8 million tonnes, and this year it may cross 40 million tonnes due to increased rabi acreage and high-urea-consuming crops.
To curb consumption and prevent diversion to non-agriculture use, the government had mandated 100% neem-coating of urea and also reduced bag size from 50 kg to 45 kg. However, these measures have not shown major impact on overall consumption.
Urea’s maximum retail price (MRP) has been kept unchanged at ₹5,628 per tonne since January 2015. The government controls urea prices and provides subsidy to keep it at the current level. For other non-controlled fertilisers, subsidies are provided under the Nutrient Based Subsidy (NBS) scheme, though the government largely continues to influence retail prices of fertilisers like DAP, which costs to the farmers with an MRP of ₹27,000 per tonne and is the second-most consumed fertiliser after urea. Due to tight supply of DAP, the consumption of other complex fertilisers has risen.
Industry sources say that if current trends continue, urea consumption could touch 45 million tonnes in the next few years. Urea’s extremely low price and political sensitivity around price hikes are key drivers behind this rising consumption.
Domestic urea production in 2023-24 stood at 31.4 million tonnes, but fell to 30.6 million tonnes in 2024-25. In April-September 2025, production declined by 5.6% compared to the same period last year. Although six new urea plants with a capacity of each plant at 1.3 million tonnes per year started operations between 2019 and 2022, production capacity reduced due to closure of two units in Kakinada (Andhra Pradesh) and Panki (Kanpur). Currently, India’s annual urea manufacturing capacity is estimated between 30 to 31 million tonnes.
To shield itself from volatility in global prices and reduce import dependence, India may need to increase domestic production capacity further. The government will now have to decide whether it continues to rely more on imports, or takes steps to expand domestic manufacturing to meet the rising demand.