Union Budget 2026–27: FAI Urges Targeted Policy Measures to Strengthen Fertiliser Security and Domestic Manufacturing
Industry Calls for Predictable Subsidy Support, Balanced Nutrition, and Investment Enablement Amid Global Volatility
EDITOR’S SYNOPSIS
FAI has outlined budget priorities to ensure fertiliser security amid global input price volatility and import dependence.
The industry has sought predictable subsidies, balanced nutrition reforms, and support for domestic phosphatic capacity.
Tax, GST, and circular economy measures have been flagged to improve cost efficiency and manufacturing viability.
New Delhi, February 19, 2025: Ahead of the Union Budget 2026–27, The Fertiliser Association of India (FAI) has urged the Government to consider targeted policy and fiscal measures to strengthen India’s fertiliser security, promote balanced nutrient use, and support domestic manufacturing in line with the vision of Atmanirbhar Bharat.
FAI noted that India’s record food grain production of 358 million tonnes in 2024–25 underscores the critical role of fertilisers in sustaining agricultural growth. To maintain this momentum, the industry has emphasised the importance of improving nutrient use efficiency, encouraging modern agricultural technologies, and ensuring a stable and predictable policy environment amid rising input costs and climate variability.
The industry highlighted that sustained volatility in international prices of key fertiliser inputs such as rock phosphate, phosphoric acid, ammonia, potash and sulphur, driven by geopolitical tensions, supply chain disruptions and export restrictions by major producing countries, has increased production costs and import dependence. While timely government interventions, including supply arrangements with Morocco, Saudi Arabia and Qatar, have helped secure availability, continued uncertainty in global markets has impacted investment sentiment.
Observing the cumulative impact of these challenges, Dr. Suresh Kumar Chaudhari, Director General, The Fertiliser Association of India, noted that sustained fertiliser security depends on maintaining a balance between affordability for farmers, financial viability for manufacturers, and investment continuity. He said that predictable subsidy frameworks, rational taxation, and timely policy interventions are essential to ensuring uninterrupted nutrient availability while supporting efficient and sustainable fertiliser use.
FAI has underscored the need for sustained policy support to encourage fresh investments in indigenous phosphatic and potassic fertiliser capacity, backward integration projects, and strategic overseas sourcing, in line with Atmanirbhar Bharat and Make in India objectives. The industry also highlighted the importance of targeted incentives for acid and complex fertiliser plants to improve efficiency, reduce emissions, and address challenges related to phospho-gypsum disposal by promoting its use in construction, soil amendment, and industrial applications.
On the taxation front, the fertiliser industry has sought rationalisation of customs duties and GST provisions affecting key raw materials. This includes exemption or reduction of Basic Customs Duty on inputs such as ammonia, phosphoric acid, sulphuric acid, rock phosphate and sulphur, relief from Agriculture Infrastructure and Development Cess, and resolution of issues arising from inverted GST duty structures leading to accumulation of unutilised input tax credit.
The industry has also recommended direct tax measures, including restoration of weighted deductions for R&D and farmer education, incentives for downstream fertiliser projects, accelerated depreciation for energy-efficient equipment, and easing of compliance and litigation burdens.
FAI further emphasised the need to promote balanced fertilisation to protect soil health, noting that disparities between urea and P&K fertiliser prices have led to an imbalanced N:P:K consumption ratio. Bringing urea under the nutrient-based subsidy framework, alongside promotion of innovative fertiliser products, bio-fertilisers, integrated nutrient management and initiatives such as PM-PRANAM, would help correct price distortions and support sustainable farming practices.
The fertiliser industry expressed confidence that timely consideration of these suggestions in the Union Budget 2026–27 would improve cost efficiency and financial viability, strengthen domestic manufacturing, reduce vulnerability to external supply shocks, and ensure uninterrupted availability of fertilisers to Indian farmers, supporting long-term agricultural growth and national food security.
About The Fertiliser Association of India (FAI)
The Fertiliser Association of India (FAI), established in 1955, is a premier non-profit organisation which represents the ecosystem stakeholders such as fertiliser manufacturers, importers, technology providers, equipment suppliers, and researchers across the country. With a mission to enhance the operational efficiency of the fertiliser sector and promote balanced and scientific fertilisation, it plays a crucial role in strengthening India’s agricultural productivity and food security. It also serves as a bridge between industry and government and facilitates dialogues between them while offering policy inputs. With its four regional offices, technical divisions, training programmes, specialised studies, and international collaborations, FAI contributes immensely to continuous improvement in production, distribution, sustainability, and fertiliser use efficiency in the country. Most notably, it also publishes widely respected journals and research materials, which help shape policy and industry decisions.
