New Delhi: India is spending more to subsidize fertilizer even as much of what farmers apply to their fields is lost before crops can use it.
Around two-thirds of fertilizer applied to crops may not be absorbed by plants, leading to groundwater contamination, air pollution and inefficient use of subsidized farm inputs, according to manufacturers and experts.
The concern is particularly significant for India, the world’s second-largest fertilizer consumer and largest urea importer, with the government’s fertilizer subsidy bill crossing ₹2.17 trillion in fiscal year 2026 (FY26). For FY27, the fertilizer ministry has proposed ₹3.54 trillion in fertilizer subsidies.
India’s annual fertilizer requirement was estimated at about 67.7 million tonnes (mt) for FY26, including urea, diammonium phosphate (DAP), muriate of potash (MOP) and nitrogen, phosphorus and potassium (NPK) fertilizers. Urea accounts for 55-60% of total consumption, with annual demand at around 40mt and growing about 5% a year.
Scientific studies show that plants absorb only 30-40% of applied fertilizers such as urea and DAP, leaving 60-65% of the nutrients unused. Some of these losses occur through leaching into groundwater, while some enter the atmosphere as nitrous oxide, said SC Mehta, chairman and managing director, Deepak Fertilisers and Petrochemicals Corp. Ltd (DFPCL), in an interview.
“The fertilizer subsidy is not only hurting the government but also the environment,” Mehta said.
DFPCL is one of India’s largest manufacturers of bulk and speciality fertilizers.
“Conventional fertilizers like Urea, DAP, and MOP are bulk fertilizers applied to soil, where nutrient losses occur through volatilization, leaching, and fixation due to precarious soil health conditions and imbalanced application of bulk chemical fertilizers,” said K J. Patel, managing director, Indian Farmers Fertiliser Cooperative Ltd (Iffco).
Patel said nutrient-use efficiency for conventional bulk fertilizers is 30-40%, compared with 80-90% for nano fertilizers. Iffco is promoting nano fertilizers as an alternative to bulk urea and DAP, using nanotechnology-based formulations intended to improve nutrient uptake.
He added that the key difference between nano fertilizers and conventional bulk fertilizers such as urea and DAP lies in targeted nutrient delivery and nutrient uptake efficiency.
“Low nutrient-use efficiency means farmers may need to apply more fertilizer to meet crop requirements, increasing input costs and the government’s subsidy burden. Excess nitrogen can also leach into groundwater or be released into the atmosphere, contributing to environmental damage,” said another manufacturer who wished not to be quoted.
Experts said the answer lies in more balanced fertilizer use rather than continued dependence on urea.
“Urea is an important source of nitrogen for crops, but its excessive application, disproportionate to other fertilizers, can create an imbalance in soil nutrients…Overuse of urea may not only reduce nutrient-use efficiency but also affect soil health and crop productivity over time,” said Sachchida Nand, former additional director general at the Fertiliser Association of India and visiting professor at the Indian Council for Research on International Economic Relations (Icrier).
The Economic Survey FY26 proposed a calibrated increase in the retail price of urea, coupled with an equivalent per-acre direct cash transfer to farmers, to discourage excessive use and correct the imbalance in soil nutrients.
The proposed mechanism would protect farmers’ purchasing power while making fertilizer prices better reflect agronomic needs. The Survey also suggested indexing transfers to agro-climatic zones and cropping patterns, recognizing that fertilizer requirements vary across crops and regions.