India plans to increase fertilizer subsidies to a record high of more than $ 20.64 billion in 2021/22 to avoid bottlenecks amid a sharp surge in global chemical prices, sources familiar with the matter said.
The amount is almost twice as high as budgeted for the fertilizer subsidy for the financial year ending March 31st.
India, the largest importer of urea, is a major buyer of diammonium phosphate (DAP), which is needed to feed its vast agricultural sector, which employs about 60% of the country's workforce and accounts for 15% of the $ 2.7 trillion economy.
The government offers financial support to companies that sell fertilizers at below market prices.
Global fertilizer prices rose about 200% in the past year after record-breaking prices for the two main fuels coal and natural gas, which are used to produce plant nutrients, and China and Russia imposing new export restrictions on fertilizers.
This fiscal year, New Delhi has already increased fertilizer subsidies twice, increasing budgeted support from Rs. 835.48 billion by Rs. 434.30 billion.
"This year will be one of the largest subsidy payments as prices have risen in international markets for a variety of reasons, including China's restrictions on DAP exports," said one of the officials.
India imports an average of 60% of the 10-12 million tons of its annual DAP consumption. "40% of them come from China".
Some DAP shipments from China have been delayed due to export restrictions. To avoid bottlenecks, the government has also decided to further increase compensation for companies that import DAP after the restriction by China.
"We have asked some of the NPK (nitrogen, phosphate and potassium) manufacturers to switch to producing DAP," said the source, adding that the fertilizer ministry has prioritized increasing supplies to counties with low stocks.
"We used to use 15 trains to deliver fertilizers around the country, but since October we have doubled the number of trains for deliveries," this source said.
However, farmers in India have complained of difficulties in obtaining DPA. The demand for fertilizers increases in October and November, a high season for growing winter crops such as wheat.
Source
Hansa Terminhandel GmbH