Fertiliser industry seeks duty cuts, subsidy reforms ahead of Union Budget

Ahead of the Union Budget 2026, the Fertiliser Association of India (FAI) has made key demands to the Centre, including rationalisation of customs duties on major raw materials, incentives for downstream projects, and bringing urea under the nutrient-based subsidy (NBS) framework.

The FAI has sought exemption or reduction of basic customs duty on inputs such as ammonia, phosphoric acid, sulphuric acid, rock phosphate and sulphur.

It has also asked for relief from the Agriculture Infrastructure and Development Cess and for the resolution of problems arising from inverted GST duty structures, which have led to the accumulation of unutilised input tax credit.

On the direct tax front, the industry has recommended restoration of weighted deductions for R&D and farmer education, incentives for downstream fertiliser projects, accelerated depreciation for energy-efficient equipment, and easing of compliance and litigation burdens.

The FAI has emphasised the need to promote balanced fertilisation to protect soil health. Bringing urea under the nutrient-based subsidy framework, alongside promotion of innovative fertiliser products, bio-fertilisers and integrated nutrient management, would help correct price distortions and support sustainable farming practices, it said.

Sustained volatility in international prices of key fertiliser inputs such as rock phosphate, phosphoric acid, ammonia, potash and sulphur, driven by geopolitical tensions, supply chain disruptions and export restrictions by major producing countries, has increased production costs and import dependence.

While timely government interventions, including supply arrangements with Morocco, Saudi Arabia and Qatar, have helped secure availability, continued uncertainty in global markets has impacted investment sentiment.

FAI Director General Suresh Kumar Chaudhari said sustained fertiliser security depends on maintaining a balance between affordability for farmers, financial viability for manufacturers, and investment continuity. 

The industry has urged the government to consider targeted policy and fiscal measures to strengthen India's fertiliser security, and support domestic manufacturing.