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Fertilisers Association of India (FAI) has said that the government's fertiliser subsidy will rise to Rs 2.3-2.5 lakh crore in this fiscal (FY23) but the bill may fall by 25 per cent in the 2023-24 financial year with moderation in global prices. FAI expressed concern that the fixed cost of urea has not been increased affecting the viability of urea plants. It also pointed out that the industry is running on a very thin margin, which is hampering new investments in this sector.

The industry body said there is sufficient availability of fertilisers, including urea and DAP, for the ongoing rabi (winter-sown) season. This has helped insulate the farmers from the impact of a steep increase in the cost of all fertilisers due to sharp rise in international prices of fertilisers and raw materials. The fertiliser subsidy stood at Rs 1.62 lakh crore in the previous financial year. It also pointed out that there has been unprecedented international price rises for fertilizers and fertilizer raw materials including natural gas/LNG during the past two years.

On other issues related to the sector, the association said that the viability of the urea industry is affected because of the delay in the approval of minimum fixed cost and non-revision of fixed cost since 2002-03, except nominal increase allowed under Modified NPS-III policy since 2014. Prices of some of the commodities have started coming down in recent months but still remain significantly higher than pre-pandemic period. The international price of DAP (CFR (cost and freight-India)) increased from $555 per tonne for April 2021 to $945 per tonne for July 2022. It has declined to $722 per tonne for October 2022.