Fertiliser stocks to be in focus ahead of Budget 2026 as sector hopes for targeted reforms

Fertilisers stocks to remain in focus ahead of the Budget.

• Fertiliser sector calls for policy stability and targeted reforms in Union Budget
• Subsidy outgo expected to remain high, with Rs 1.9 lakh crore pegged for FY2027
• Experts call for balanced fertiliser use and sustainable farming practices.

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As India gears up for the Union Budget, the fertiliser sector is looking for policy continuity alongside targeted reforms to support farm productivity, fiscal discipline and long term sustainability. Stocks such as Fertilizers and Chemicals Travancore (FACT), Paradeep Phosphates,

Chambal Fertilizers & Chemicals, Madras Fertilizers, Rashtriya Chemicals and Fertilizers (RCF) and National Fertilizers will be closely watched.

In the previous Budget for FY2025-26, the government allocated Rs 1.84 lakh crore towards fertiliser subsidies, marginally lower than the revised estimate of Rs 1.89 lakh crore in FY2024-25. The moderation underscored the Centre’s attempt to balance fiscal prudence while ensuring uninterrupted availability of fertilisers for farmers.

Industry experts expect the broad policy framework to remain supportive, with incremental tweaks rather than sweeping changes. According to ICRA, fertiliser sales volumes are likely to grow in line with historical trends.

“ICRA expects fertiliser sales volumes to grow between 1 percent to 3 percent YoY in FY2027 in line with the long term trends,” the rating agency said. A key development to watch will be policy changes in the urea segment.

“GoI is expected to revise the energy norms and the fixed costs payable to the urea units as part of the retention price by the end of this fiscal. The new policy regime would be a key development to watch out for and would impact the profitability of urea units going forward,” ICRA added.

For phosphatic and potassic fertilisers, profitability is expected to remain stable. ICRA noted that “the profitability of P and K fertilisers is expected to remain stable with GoI expected to keep the subsidy rates under the NBS scheme remunerative to ensure comfortable availability of non urea fertilisers for farmers.” Overall, the subsidy outgo for the sector is expected to remain elevated, with ICRA pegging it at around Rs 1.9 lakh crore in FY2027.

From an industry perspective, the focus is on measures that strengthen the domestic fertiliser ecosystem while reducing exposure to volatile global supply chains. Abhishek Wadekar, Founder Chairman, Tradelink International Private Limited, said the upcoming Budget should address multiple structural issues.

“As India prepares for the upcoming Union Budget, we expect the budget to look forward to policy measures that strengthen the agricultural and fertilizer ecosystem. The fertilizer industry plays a pivotal role in ensuring food security and we request the government to look at the aspects of affordability, accessibility and innovation in this sector,” he said.

Capacity creation and self reliance remain central themes for large domestic players. Nishant Kanodia, Chairman, Matix Fertilisers and Chemicals Ltd, said policy support over the years has played a key role in sustaining agricultural momentum.  "India’s agricultural momentum has been strongly supported by the government’s sustained focus on fertiliser availability, affordability and domestic capacity creation,” he said. With urea demand rising alongside higher cropping intensity, Kanodia stressed the need for a balanced approach.

Alongside supply side measures, experts are also urging sharper focus on rationalising fertiliser use. Pushan Sharma, Director, Crisil Intelligence, highlighted that urea application in India averaged around 182 kilogram per hectare in 2023, well above the global average of about 116 kg per hectare, with wide regional disparities.

While schemes such as PM PRANAM and the Market Development Assistance programme aim to promote balanced nutrient management and organic inputs, Sharma pointed out that these initiatives together accounted for just 0.1 percent of the total fertiliser budget in FY2026. He said allocations to schemes like MDA and GOBARdhan need to be scaled up meaningfully to achieve sustainable agriculture without compromising yields.

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