India approves $860 mil subsidy on phosphatic, potassic fertilizers for FY 2024-25

The Indian government on Dec. 17 approved the Rupee 73.1 billion (about $860 million) subsidy on phosphatic and potassic (P&K) fertilizers for the financial year 2024-25.

The supplementary grant, which aims to bolster agricultural support to farmers, is earmarked for the nutrient-based subsidy system (NBS) scheme for P&K fertilizers.

"This additional subsidy might be sufficient for Q1, even if Rupees 3,500/mt subsidy for DAP is extended to Q1, which is supposed to end on Dec. 31, 2024," said Saurabh Patil, research analyst at S&P Global Commodity Insights.

The discussions around the supplementary demand began on Dec. 16, and the proposal was swiftly passed by the Indian parliament on Dec. 17. Following the approval, the finance ministry is expected to issue a formal notification shortly.

The additional funding comes in light of the initial fertilizer subsidy budgeted for the 2024-25 fiscal year, which was set at about Rupees 1,641 billion, with a specific allocation of Rupees 450 billion for P&K subsidies.

As the agriculture sector navigates the challenges posed by volatile commodity prices and exchange rates, these supplementary grants will serve as a crucial lifeline in ensuring the availability of essential fertilizers to farmers across the country.

In the coming months, the financial implications of this subsidy, along with its impact on the overall budget allocation for fertilizers, will be closely monitored.

Platts, part of Commodity Insights, assessed the DAP CFR India price at $633/mt on Dec. 12, down $1/mt from Dec. 5.