Budget Snapshot: Tight DAP market unlikely to upset government’s fertiliser subsidy calculations Global DAP market is expected to remain in tight equi

The Indian government is anticipating an increase in its fertiliser subsidy bill in FY26 following a decrease in FY24 and FY25. This increase is influenced by an extension of the special package for Di-Ammonium Phosphate (DAP), which will incur costs of Rs 3,850 crore, bringing the total expenditure on DAP since April 2024 to Rs 6,475 crore.

Additionally, DAP prices are projected to remain high due to China imposing restrictions on fertiliser exports and a rise in ammonia prices. It's important to note that DAP constitutes less than one-fifth of total fertiliser sales in India, while urea, which is stable in production, accounts for around 70% of the fertiliser subsidies. Consequently, the overall fertiliser subsidy bill is expected to align with FY25 levels at Rs 1.6 lakh crore, remaining significantly lower than the peak of Rs 2.5 lakh crore observed in FY23.