Russia-Ukraine War: Sanctions against Iran could increase India's Fertiliser Subsidy Bill by 60%

According to the sources, the price of urea in the international market has risen to Rs 3,700 per bag (approximately $49), while the price of diammonium phosphate (DAP) has risen to Rs 4,200 (approximately $56). In India, however, a bag of urea costs Rs 266 while a bag of DAP costs Rs 1,350.

"We are committed to maintaining stable prices, but international developments have made fertilizers prohibitively expensive." There is the issue of US sanctions against Iran, as well as Iran's status as a major DAP supplier, but the sanctions make procurement difficult. "Add to that the Russia situation, and the difficulty in obtaining ammonia and gas from Russia for fertilizer production," a senior government official told.

"There are a lot of other things going on." China used to export fertilizers but has since begun to import them. Not only do we pay more for fertilizer, but the entire world does. "We expect the subsidy bill to rise significantly, possibly to Rs 2 lakh crore from Rs 1.25 lakh crore last year," the functionary added.

While there have been reports of a fertilizer shortage in the country for several months, the Centre has repeatedly denied this. "There is no shortage," a senior government official informed. When it rains, villages require fertilizer, and all of them require it at the same time. So the entire village shows up one fine morning to buy fertilizer, and there are obviously long lines. The media observes the lines and reports that there is a scarcity when there is none."

Prepared for Kharif Season

Although the demand for fertilizer to be used in crop sowing during the Kharif season will not begin until May, the government has already purchased an initial stock of about 30 lakh metric tonnes of DAP and 70 lakh metric tonnes of urea for the season, according to sources.

During the Kharif season, the usual demand for fertilizer is around 80-85 lakh metric tonnes, but this year's demand is expected to be even higher, according to the official.

"A number of urea plants are sprouting up. In three years, we will be self-sufficient in urea," the official added.

The Union Ministry of Chemicals and Fertilizers has begun the process of reviving five fertilizer plants: Hindustan Urvarak Rasayan Limited's (HURL) plants in Gorakhpur (Uttar Pradesh), Barauni (Bihar), and Sindri (Jharkhand), Ramagundam Fertilizers and Chemicals Limited (RFCL) in Ramagundam (Telangana), and Talcher Fertilizers Limited (TFL) (Odisha).