Highlights
India spends over ₹1.9 trillion every year on fertilizer subsidies — more than the entire agriculture budget — yet soil health keeps getting worse.
India’s N:P:K ratio has crashed to 10.9:4.1:1 against the recommended 4:2:1 — a direct result of cheap urea addiction destroying farmland silently.
Economic Survey 2026 officially recommends raising urea prices and giving farmers direct cash transfers per acre — a bold reform that could save both soil and money.

Urea Fertilizer Policy India 2026: Why the Crisis Is Real and What Must Change Now

Let us be straight about something.

A farmer in Haryana walks into his local kirana-style agri shop. He picks up a 45 kg bag of urea for just ₹242. The same bag costs the government over ₹2,400 to produce and deliver. The farmer pays roughly 10% of the real cost.

Now here is the question — bhai, agar koi cheez itni sasti ho, toh kya koi usse samajh-bujhkar use karega?

The answer is no. And that single fact sits at the heart of India’s urea fertilizer policy crisis in 2026.

What Is the Current Urea Fertilizer Policy in India?

India’s urea policy has not changed in a meaningful way since March 2018 — the last time the government adjusted the Maximum Retail Price (MRP) of urea. Since then, every 45 kg bag of urea is sold to farmers at a fixed price of ₹242, regardless of what it actually costs to make or import.(Urea Fertilizer Policy India 2026)

The government — through the Ministry of Chemicals and Fertilizers, Department of Fertilizers — pays the difference between the real cost and what the farmer pays. This is called the New Pricing Scheme (NPS) for indigenous urea, combined with the freight subsidy.

For the financial year 2026-27, the Department of Fertilizers has been allocated ₹60,000 crore under urea subsidy alone, according to India’s Union Budget documents. The total fertilizer subsidy bill, including P&K fertilizers, regularly crosses ₹1.9 trillion per year.

That is India’s second-largest subsidy — right after food.

And yet, despite spending this astronomical amount, India’s soil is getting weaker, farmers are using more fertilizer to get less output, and the country remains dangerously dependent on imports. Something is clearly broken.

The Numbers That Should Alarm Every Indian

Here is a set of facts that do not get enough attention in mainstream conversation.(Urea Fertilizer Policy India 2026)

India’s urea consumption is spiraling upward. In 2024-25, India consumed 38.8 million tonnes of urea. That figure is expected to cross 40 million tonnes in FY26, according to official estimates. Every year, consumption grows — not because farms are expanding, but because the same land is being fed more and more urea just to maintain yields.

The soil is losing its ability to respond. In 1980, one tonne of nitrogen fertilizer helped produce approximately 35 tonnes of foodgrain. Today, that same tonne of nitrogen produces only around 16 tonnes — less than half. The soil is working harder, receiving more inputs, and giving back less. That is not progress. That is a warning sign.

The N:P:K ratio has gone dangerously out of balance. The ideal nutrient ratio for most Indian crops is approximately 4:2:1 — that is four parts nitrogen to two parts phosphorus to one part potassium. In 2009-10, India’s ratio was 4:3.2:1 — close to healthy. By 2023-24, it had deteriorated to a shocking 10.9:4.1:1, according to the Economic Survey 2025-26 published by the Government of India. This skewed ratio is a direct consequence of cheap urea pushing farmers to use far more nitrogen than their crops actually need.

Only about 25% of Indian soils have sufficient Soil Organic Carbon (SOC) — the critical ingredient for nutrient retention and microbial health — according to NITI Aayog’s 2026 data. USDA

This is not a small farming problem. This is a national food security emergency that is developing slowly, quietly, and steadily under our feet — quite literally.

Why Do Indian Farmers Overuse Urea? The Real Reason

This is where the story gets important — and where blaming farmers would be completely unfair.(Urea Fertilizer Policy India 2026)

Farmers are not overusing urea because they are careless. They are overusing it because the price signal is completely wrong.

When urea costs ₹242 for 45 kg and every other nutrient — phosphorus, potassium, micronutrients — costs significantly more, a rational farmer will use more urea. It is the cheapest input available. As one analyst pointed out, if in 2010 a farmer had to sell 27 kg of rice to buy one bag of urea, today that same bag costs just 12 kg of rice — so it simply does not make economic sense for farmers to use urea carefully or consider alternatives. OneStop ESG

Excessive and imbalanced use of urea adversely affects soil health and does not necessarily increase yields proportionately OneStop ESG — a point acknowledged by the Indian Farmers Fertiliser Cooperative (IFFCO) itself.

The government’s subsidy structure has accidentally created what experts call a “subsidy trap” — a cycle where artificially cheap urea encourages overuse, overuse degrades soil, degraded soil needs even more fertilizer to maintain yields, and the subsidy bill keeps climbing.

While increasing supply may solve short-term shortages, it does not address the underlying issue of overuse. In fact, more availability at subsidised prices could worsen the imbalance in nutrient usage and further degrade soil health. RFF

What the Government Has Done So Far — and Why It Is Not Enough

To be fair, the Indian government has tried several measures to address the urea problem. Let us look at what has been done:(Urea Fertilizer Policy India 2026)

Neem-Coated Urea: The government mandated that all domestically produced urea be coated with neem oil. The idea was to slow the release of nitrogen and reduce diversion of urea for industrial use. It worked partially — but it did nothing to reduce the volume of urea being applied.

Nano Urea by IFFCO: India’s own IFFCO developed and promoted Nano Urea — a liquid fertilizer where just 500 ml of solution is claimed to replace one full 45 kg bag of granular urea. The government ran a pilot in 100 districts and pushed adoption heavily through Pradhan Mantri Kisan Samridhi Kendras (PMKSKs) across the country. However, a field study by Punjab Agricultural University in 2024 reported yield decline in rice and wheat with nano urea, and adoption has partly been coercive, bundled with granular urea purchases, failing to reduce the subsidy burden materially. OneStop ESG

Direct Benefit Transfer (DBT) in Fertilizers: Subsidies are now transferred to fertilizer companies after verified point-of-sale transactions linked to farmer Aadhaar cards. This has improved transparency but has not changed farmers’ actual consumption behavior because urea is still priced at ₹242.

Soil Health Cards: The government distributed soil health cards to help farmers understand what their soil actually needs. A noble initiative — but when urea is so cheap, most farmers ignore the card’s balanced nutrient recommendations.

The Economic Survey 2026 notes that these steps largely control supply and do little to change farmers’ actual fertiliser choices, which are still driven by cheap urea. Farm Service Agency

The honest conclusion: the existing measures are patches on a policy that needs structural surgery.

What the Economic Survey 2026 Says Must Change

In January 2026, the Government of India’s Economic Survey 2025-26 made a bold and historically significant recommendation regarding Urea Fertilizer Policy in India.

The Economic Survey 2025-26 advised the government to increase the retail price of urea, which has remained unchanged at ₹242 per 45 kg bag since 2018 — while transferring an equivalent amount directly to farmers on a per-acre basis. USDA

The logic is elegant. Farmers receive the same overall purchasing power, but the relative price of nitrogen moves closer to its agronomic cost. Farmers who already apply nitrogen efficiently gain because they receive the full transfer while spending less at the counter. Farmers who over-apply face a clear incentive to shift towards balanced fertilisation, soil testing, nano-urea, liquid fertilisers and organic amendments. USDA

In plain language: give every farmer a fixed amount of cash per acre. Let them decide how to spend it. When urea costs more at the shop, they will think twice before overusing it — because it is now coming out of their own pocket, not just a government subsidy.

According to the Survey, India’s digital infrastructure such as PM-Kisan, Aadhaar-linked fertiliser sales, and the Integrated Fertiliser Management System provide the necessary tools to implement such targeted cash transfers and monitor usage effectively. Farm Service Agency

This is not a radical idea. Bangladesh increased urea prices significantly in 2022 and 2023 — and saw no major farmer protests and no decline in food production.

India’s Import Dependence: The Hidden Risk Nobody Talks About

Here is another dimension of the Urea Fertilizer Policy India 2026 crisis that demands urgent attention.

India’s domestic urea production increased by 23 percent ahead of Kharif 2026 The Business Research Company — a positive development. But even with this boost, India still depends heavily on imports for key fertilizers. Around 87% of urea consumption is domestically met, while for DAP only about 40% comes from local production, and for Muriate of Potash (MOP), 100% is still imported. GlobeNewswire

This import dependence makes India’s agricultural supply chain extremely vulnerable. The Russia-Ukraine conflict in 2022 caused fertilizer prices to spike globally, pushing India’s fertilizer subsidy bill to a peak of ₹2.5 trillion in 2022-23. Any future conflict in West Asia, Central Asia, or disruption in global shipping can send the same shock through India’s farm sector overnight.

The government has floated global tenders well in advance and diversified sourcing to mitigate risks from geopolitical disruptions The Business Research Company — which is smart short-term risk management. But the long-term solution has to be reducing urea consumption per unit of output, not just stockpiling more. Urea Fertilizer Policy India 2026

What a Smart Urea Fertilizer Policy Should Look Like

Based on official government data, the Economic Survey 2026 recommendations, and global best practices, here is what a reformed Urea Fertilizer Policy India 2026 should include:

Gradual Price Rationalization With DBT Protection: Increase urea MRP in phased steps — not all at once — while simultaneously transferring cash directly to farmers’ bank accounts per acre of landholding. Use PM-Kisan infrastructure to execute this seamlessly.

Bring Urea Under NBS Framework: The Commission for Agricultural Costs and Prices (CACP) has long recommended bringing urea under the Nutrient Based Subsidy (NBS) Scheme — the same system used for P&K fertilizers. This would promote balanced nutrient use and reduce nitrogen overdependence.

Expand Nano Urea With Honest Assessments: Nano urea has potential, but coercive bundling must stop. Let it compete on merit. If it works in a particular crop-soil combination, farmer adoption will follow naturally.

Link Subsidies to Soil Health Card Data: Subsidies should be aligned with what soil tests show a particular farm actually needs — not a blanket rate that ignores ground reality.

Invest in Green Urea Production: The National Green Hydrogen Mission should pivot some resources toward domestic green urea manufacturing — producing urea using green hydrogen instead of natural gas, reducing both import dependence and carbon emissions from production.

The Environmental Cost That Cannot Be Ignored

This article would be incomplete without addressing the climate angle.

Nitrous oxide (N₂O) released from excess urea has 272 times the global warming potential of CO₂. Soil emissions account for over 20% of India’s agricultural greenhouse gas emissions, according to NITI Aayog 2026 data. Agricultural soil emissions rose approximately 7% between 2011 and 2019, paralleling a 10% rise in nitrogen fertilizer consumption. USDA

Every extra bag of urea thrown on a field that does not need it is not just wasted money. It is a greenhouse gas bomb being buried in the ground.

For a country that has signed global climate commitments and is actively building a carbon credit market, fixing the urea problem is not just an agricultural reform — it is a climate imperative.

FAQ: Urea Fertilizer Policy India 2026

Q1. What is the current price of urea in India in 2026?
The Maximum Retail Price (MRP) of urea remains fixed at ₹242 per 45 kg bag — unchanged since March 2018. The government pays approximately ₹2,400 or more per bag in subsidy.

Q2. How much does India spend on fertilizer subsidy in 2026?
The Department of Fertilizers has been allocated ₹60,000 crore for urea subsidy in the Union Budget 2026-27. Total fertilizer subsidies including P&K fertilizers regularly exceed ₹1.9 trillion annually.

Q3. What did Economic Survey 2026 recommend about urea?
The Economic Survey 2025-26 recommended raising urea prices while giving farmers direct per-acre cash transfers, so they retain purchasing power but have a price incentive to reduce overuse.

Q4. What is Nano Urea and does it work?
Nano Urea is a liquid fertilizer developed by IFFCO where 500 ml is claimed to replace one 45 kg urea bag. Results have been mixed — Punjab Agricultural University’s 2024 field study reported yield declines in rice and wheat. The technology shows promise but needs better field validation before mass mandation.

Q5. Why does India import so much fertilizer?
India produces about 87% of its urea domestically but depends heavily on imports for DAP (60% imported) and MOP (100% imported). Gas availability, production capacity, and global price volatility all drive this dependency.

Q6. What is the N:P:K ratio crisis in India?
India’s nitrogen-phosphorus-potassium usage ratio has deteriorated to 10.9:4.1:1 against the recommended 4:2:1 — driven by cheap urea making nitrogen disproportionately attractive, leading to severe soil imbalance.

Q7. What is the NBS Scheme and why is urea not under it?
The Nutrient Based Subsidy (NBS) Scheme provides a fixed per-nutrient subsidy for P&K fertilizers while allowing market-based pricing. Urea has historically been kept outside NBS due to political sensitivity around price changes for farmers.

The Bottom Line

The Urea Fertilizer Policy India 2026 is at a genuine turning point.

India cannot keep spending ₹1.9 trillion every year on subsidies that are slowly killing the soil, distorting nutrient use, creating import vulnerabilities, and adding to greenhouse gas emissions — all while delivering diminishing returns to farmers.

The Economic Survey has shown the political courage to name the problem clearly. The digital infrastructure exists to implement the solution fairly. What is needed now is the policy will to act.

Bhai, khet mein khadha kisaan jaanta hai ki zameen thak gayi hai. Ab waqt aa gaya hai ki sarkar bhi yeh maan le — aur badlaav ki shuruaat kare.

The soil is not just dirt. It is the foundation of every plate of food served in every home in this country. Fixing the urea policy is not optional. It is essential. Urea Fertilizer Policy India 2026

Sources: Ministry of Chemicals and Fertilizers (fert.gov.in), Prime Minister’s Office (pmindia.gov.in), Press Information Bureau (pib.gov.in), India Union Budget 2026-27 (indiabudget.gov.in), Economic Survey 2025-26, Department of Fertilizers, DD News (ddnews.gov.in)