Industry bats for long-term deals; govt aid for DAP under recoveries

Fertiliser firms expect the Centre's special package to cover under recoveries from rising DAP costs, even as global prices strain margins and import deals shape supply stability

The central government has increased the subsidy on phosphatic fertilisers for the second half of 2025-26 to offset the rise in prices. Despite this, companies importing diammonium phosphate (DAP) could still face losses of around ₹900 per bag, as the landed price remains higher than the subsidy announced.

 

The industry, however, remains hopeful that the Centre’s assurance to cover all underrecoveries through a special package, coupled with long-term import agreements, will ensure steady supplies during the peak demand season.

 

“That special package is still continuing mainly for DAP to ensure availability,” Sankarasubramanian S, managing director and chief executive officer of Coromandel International, said in a recent interview to Business Standard. He added that, as far as DAP is concerned, the industry is unlikely to suffer losses since companies have retained the same maximum retail price while absorbing the additional costs.

 

 

“In fact, with global commodity prices softening, if India plans its DAP procurement efficiently, we should be able to manage the price increase as well,” he said.

 

India is the world’s largest importer of DAP, and whenever the country enters the market, prices tend to rise, he said. “We can look at a long-term contract — as has been done this year,” he added. 

 

India consumes 10-11 million tonnes (mt) of DAP annually, making it the second-most used fertiliser in the country after urea. DAP is a key nutrient during the rabi season, which begins in a few weeks, and is heavily used in wheat and potato cultivation. In 2024-25, India imported close to 5 mt of DAP, with the rest produced domestically.

 

A few months ago, Saudi Arabia’s Maaden — one of the world’s leading DAP manufacturers — signed a long-term agreement with three Indian fertiliser companies: Indian Potash, Krishak Bharati Cooperative, and Chambal Fertilisers. The deal covers the supply of 3.1 mt of DAP annually for five years starting 2025–26, with a provision for a five-year extension based on mutual consent.

 

Most of the DAP manufactured in India uses imported rock phosphate, as domestic grades are not suitable for high-quality DAP production. A few plants also produce DAP using imported phosphoric acid, while some have the capability to make phosphoric acid from rock phosphate, industry sources said.

 

Trade sources estimate that with the current DAP import price at around $780 per tonne, the landed cost comes to roughly ₹69,240 per tonne. On top of this, packing and handling charges add about ₹1,000 per tonne, while another ₹1,000 goes towards financing and insurance.

 

This brings the total to around ₹71,240 per tonne. Taxes and duties add another ₹3,462, taking the overall cost to roughly ₹74,703 per tonne. In comparison, the combined value of the retail price and subsidy — ₹27,000 per tonne and ₹29,805 per tonne, respectively — totals ₹56,805.

 

That leaves a gap of roughly ₹17,898 per tonne, or a loss of about ₹895 per 50-kilogram bag of imported DAP sold in India.

 

The equation is slightly different for domestic manufacturers. While the landed prices of rock phosphate and phosphoric acid have also risen in recent months, the increase has not been as steep as that for imported DAP.

 

Rabi sowing off to brisk start; no urea shortage anywhere, says Centre

 

Sowing of rabi crops has started on a brisk note across most parts of the country as farmers scrambled to take advantage of the good soil moisture left behind due to an extended monsoon season this year. According to the latest data, rabi crops have been sown in around 7.57 million hectares till October 31, which is 15.05 per cent more than the area covered during the same period last year. Normally, rabi crops are sown in around 64 million hectares across most parts of north India. Wheat, chana, and mustard are the main rabi crops. Early sowing of all three was higher than last year till October 31, data showed. Meanwhile, the Union Department of Fertilisers on Monday discounted all reports of any shortage of urea anywhere in the country either now or during the just-concluded kharif sowing season.