Modi's Budget keeps agrochem sector on a fertile pitch

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26 Aug, 2025 12:21

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Highlights

• Fertilizer subsidy reduced for FY24-25
• Focus on Nano DAP
• Push towards bio agri inputs
• Budget allocation for farm mechanization
• Overall positive for Agri-input sector

Subsidy outlay

Subsidy forms a large part of the government’s budget and reducing the subsidy outlay is one of the top priorities. For FY24-25 the total fertilizer subsidy was announced at Rs. 164,000 crore, which is a decline of 6 percent YoY (Rs 175,100 crore budgeted for FY23-24).

It is important to note that this reduction in subsidy has been announced in line with the sharp fall seen in the raw material prices and thus is not likely to have any harsh impact on the fertilizer manufacturers.

On the other hand, the food subsidy outlay continued to be on the higher end and was increased by 4 percent to Rs 205,250 crore compared to Rs 197, 350 crore in FY23-24.

Focus on Nano DAP

India imports about 50 percent of DAP, which is a key phosphatic fertliser. The budget focused on the usage of Nano DAP and announced extending its application for all agro-climactic zones, which is a big positive. Nano fertilizers will improve crop yield with less fertiliser consumption, lighten the subsidy budget, and will cut down import requirements.

Budget allocation for agriculture mechanization

The government launched Namo Drone Didi' programme in Nov 2023, which aims to provide drones to 15,000 women Self Help Groups (SHGs) during the period FY24-25 and FY25-26 for providing rental services to farmers for agriculture purposes.

The Kisan Drone Subsidy Programme has also been initiated with the goal of streamlining tasks like spraying to reduce time and labour.

This budget included a separate Rs 500 crore allocation towards the Namo Drone scheme, which is an assertive step towards promoting agricultural drones on a commercial scale.

Focus on Bio agri inputs

There has been an increased awareness and adoption of organic and bio-fertilizers. The government is promoting natural farming under the Bharatiya Prakritik Krishi Paddhati Programme (BPKP).

For the first time the union budget included a separate Rs 100 crore fund for the promotion of organic fertilizers.

Conclusion

Coromandel International and Paradeep Phosphates will be big beneficiaries from the push towards Nano fertilizers as both have the technology in place to launch Nano DAP in coming quarters and are invested in drone technology.

Additionally, Coromandel is one of the largest organic fertiliser marketers in India and Dhanuka Agritech has a range of biological products in its pipleline. Both these companies should benefit from increased preference for bio agri inputs.