India's urea imports rose 83% to 103.5 lakh tonnes in fiscal year 2026, while DAP imports climbed 36%. Increased reliance on foreign supplies comes as domestic urea production recorded a slight decline, highlighting the country's dependence on global markets to meet domestic agricultural requirements.
Detailed Coverage
India’s fertilizer sector experienced a sharp shift in supply dynamics during the 2025-26 fiscal year. Government data confirms that urea imports surged 83%, reaching 103.50 lakh tonnes compared to 56.47 lakh tonnes in the previous fiscal year. This significant increase underlines a growing gap between domestic production and the agricultural sector's nutrient requirements.
Production Trends and Supply Mix
While imports spiked to bridge the availability gap, domestic production struggled to keep pace. Local urea manufacturing fell to 293.26 lakh tonnes in FY26, down from 306.67 lakh tonnes in the prior year. In contrast, di-ammonium phosphate (DAP) production showed modest resilience, rising to 39.14 lakh tonnes from 37.72 lakh tonnes. Despite this, DAP imports still rose 36% to 61.94 lakh tonnes, reflecting sustained high consumption across Indian farmlands.
Implications for the Fertilizer Sector
For Indian fertilizer companies, this trend presents a complex situation. Firms with higher manufacturing capabilities are facing production challenges, while the overall sector is increasingly dependent on international supply chains to maintain availability. Reliance on imports exposes the industry to global price volatility, ocean freight costs, and currency fluctuations, all of which can influence profit margins.
Investors looking at the sector typically monitor how companies manage these raw material and import costs against government-fixed retail prices. When domestic production lags, companies often rely more heavily on trading or importing finished goods, which may offer lower margins compared to local manufacturing.
What Investors Should Track
Moving forward, the key factor for the industry will be the government's subsidy policy and the trend in global commodity prices. If international fertilizer prices remain elevated, the government's total subsidy burden may increase, which often leads to delays in payout cycles for fertilizer manufacturers. Furthermore, analysts often monitor inventory levels and the success of government initiatives aimed at increasing local production capacity to reduce import dependence. The next set of quarterly results will likely provide more clarity on how individual companies have managed these input-cost pressures and the impact on their bottom line.