Just a month ago, DAP prices hovered around $720 per tonne. A senior official from a leading fertiliser company told Rural Voice that the upward trend is likely to continue and may even reach $900 per tonne, levels last seen in 2022.
Global prices of Diammonium Phosphate (DAP) have surged to $750 per tonne, a trend expected to persist in the coming months. This sharp increase is poised to significantly raise India’s fertiliser subsidy burden. According to industry sources, the primary driver of this price hike is China’s suspension of DAP exports – a major concern for India, which has long relied on China for large volumes of DAP imports.
Just a month ago, DAP prices hovered around $720 per tonne. A senior official from a leading fertiliser company told Rural Voice that the upward trend is likely to continue and may even reach $900 per tonne, levels last seen in 2022.
The spike in prices is largely attributed to China’s decision to halt exports of both DAP and, indirectly, urea. Industry insiders note that China was excluded from India’s latest urea import tender, prompting it to restrict DAP shipments to India as well.
India’s annual DAP consumption stands at approximately 10 million tonnes, with domestic production accounting for only 4.5 million tonnes. Even this limited domestic output depends heavily on imported raw materials like rock phosphate and phosphoric acid, while the remaining demand is met through direct imports of finished fertiliser.
To secure DAP availability, India has signed long-term agreements with fertiliser producers in Morocco and Saudi Arabia. However, these agreements ensure only supply, not pricing – Indian buyers must still pay prevailing international market rates. India’s status as one of the world’s largest importers also adds upward pressure on prices.
Under the Nutrient-Based Subsidy (NBS) scheme, the Indian government provides subsidies for key nutrients – Nitrogen (N), Phosphorus (P), Potash (K), and Sulphur (S) – per kilogram. While fertiliser companies have the freedom to set retail prices, the government informally caps the Maximum Retail Price (MRP) of DAP at ₹1,350 for a 50-kg bag. The gap between this price and the import cost is bridged through government subsidies.
For the ongoing Kharif 2025 season (April–September), the government has increased the DAP subsidy to ₹27,799 per tonne, as per a Cabinet-approved notification issued on March 28, 2025. Based on the current MRP and subsidy structure, companies earn around ₹54,799 per tonne of DAP. However, at the current global price of $750 per tonne, the landed cost—including freight, port handling, customs duties, bagging, and other charges – exceeds ₹68,000 per tonne, making imports financially unviable without additional support.
Industry sources confirm that the government has agreed to cover the full differential between the import cost and the MRP, ensuring that companies do not incur losses. However, this move will significantly increase the government’s fertiliser subsidy burden.
During the previous Rabi season, the government had also extended a special incentive of ₹3,500 per tonne in addition to the regular NBS subsidy. Despite such support, industry insiders claim that high-cost imports from last year have left pending subsidy dues to several companies.
On the supply front, the industry maintains that DAP availability will remain stable. However, incidents of black marketing have been reported in several regions. Experts note that while DAP remains the most affordable among complex fertilisers, its high efficacy makes it a preferred choice among farmers and an attractive commodity for opportunistic trading.
Industry stakeholders assert that these issues have been brought to the government’s attention, calling for strict monitoring and timely intervention to prevent market distortions.
