India faces urea supply and subsidy pressure ahead of the kharif season
India is trying to secure urea for kharif through domestic plants, but higher gas and import costs are increasing fiscal and farm-input pressure.
India’s fertilizer system is entering the kharif cycle under gas and pricing stress. The Hindu BusinessLine reports that kharif accounts for roughly 60% of the country’s annual agricultural output, making urea availability a high-priority economic variable. The current debate is not only whether enough product can be supplied, but also how expensive that supply will be for both farmers and the public budget.
Authorities are leaning on domestic producers to stabilize output. IFFCO is channeling available gas so that three of its five urea plants can run at full load while two units remain under annual maintenance. Kribhco’s Hazira complex is operating below potential because gas availability has not fully normalized. National Fertilizers is running four of five plants at around 65% utilization, with the Nangal unit in maintenance.
Market participants say physical sourcing options exist, but pricing risk is rising. The report notes that India may bridge part of its gas requirement through supplies linked to Russia, the US, Brazil, and Guyana. However, that does not remove cost pressure: global urea indications moved from below $500 per tonne before escalation to around $700 per tonne, while higher LNG input costs also raise domestic production expense.
Demand data show why the margin for error is thin. For kharif 2025, urea demand was estimated at 18.54 million tonnes, while sales reached 19.32 million tonnes, about 4% higher. Government stock data cited in the article put urea inventories at 6.15 million tonnes as of March 10. If output during April–September matches the previous season’s 14.48 million tonnes, availability may remain manageable, but at a more expensive cost base.
Fiscal pressure is now central. India’s 2026–27 urea subsidy allocation is set at INR 1,16,805 crore, with the imported-urea subsidy component already raised by more than 52%. With farmer retail prices for urea kept low and input energy costs elevated, any prolonged period of higher global urea and LNG prices could force additional subsidy support even if supply volumes are ultimately secured.