Fertilizer Subsidy Slashed for FY27: Focus Shifts to Domestic Production

• The Union Budget 2026-27 proposes significant cuts in fertilizer import subsidies, particularly for imported urea and P&K fertilizers.
• Overall fertilizer subsidy is projected at ₹1.70 lakh crore for FY27, down from ₹1.86 lakh crore in FY26, with urea subsidy at ₹1.16 lakh crore.
• The reduction in imported urea subsidy by ₹19,973 crore reflects India's increased domestic production, reaching over 314 LMT in 2023-24.
• India is now approximately 87% self-sufficient in urea, with six new plants commissioned in the last six years.
• The Economic Survey 2025-26 suggests a modest increase in urea prices and direct income transfers to farmers to address skewed fertilizer usage and soil degradation.

Why It Matters: FY27 budget cuts fertilizer import subsidies, promoting domestic production and hinting at pricing reforms.