Despite the Government increasing the subsidy on DAP to ₹27,799 per tonne for Kharif 2025 (April to September 2025), importing DAP remains a loss-making proposition for fertilizer companies.
If the Government does not take a decision on increasing the rate or subsidy of DAP within the next 15-20 days, then DAP could become a big problem for the Rabi season.
The price of Di-Ammonium Phosphate (DAP), the second most consumed fertilizer in the country after urea, has reached $720 per tonne in the international market.
This will increase the subsidy burden on the government. However, there is unlikely to be an immediate increase in DAP prices as the Government will bear the brunt of the increased costs.
Despite the Government increasing the subsidy on DAP to ₹27,799 per tonne for Kharif 2025 (April to September 2025), importing DAP remains a loss-making proposition for fertilizer companies. Yet, companies are continuing to import DAP to meet demand.
According to sources in the fertilizer industry, the price of DAP was $640 per tonne in February, which reached $720 per tonne last week. An Indian company has finalized a DAP import deal at this price.
The sources suggest that this upward trend in DAP prices may continue. Meanwhile, the price of DAP’s raw material, phosphoric acid, is currently $1153 per tonne.
India consumes about 10 million tonnes of DAP annually. Out of this, 4.8 million tonnes are produced domestically, and the rest is imported. However, even for domestic production, raw materials like rock phosphate and phosphoric acid are imported. Effectively, India is almost entirely dependent on imports for DAP.
● For the current Kharif season, the government has increased the subsidy on DAP under the Nutrient Based Subsidy (NBS) scheme to ₹27,799 per tonne.
However, the maximum retail price (MRP) of DAP is still ₹27,000 per tonne (₹1350 per bag). In this scenario, companies earn ₹54,799 per tonne of DAP based on the subsidy and MRP. In contrast, at the current international price of $720 per tonne, the cost of DAP comes to ₹61,200 per tonne.
Additional costs such as customs duty, bagging, and handling are extra. Due to these factors, the price of imported DAP exceeds ₹65,000 per tonne after landing.
● Industry sources say that the Government has assured that any increased expenditure on DAP imports will be compensated.
However, there is no information about any written order in this regard. Nevertheless, some companies’ old subsidies are also outstanding. For the Rabi season (October 1, 2024, to March 31, 2025), a subsidy of ₹21,911 per tonne was fixed for DAP, along with a special incentive of ₹3500 per tonne.
Through a notification issued by the Fertilizer Department on March 28th, the subsidy has been increased to ₹27,799 per tonne for the current Kharif season.
The facilitate DAP imports, the Government has entered into long-term agreements with Morocco and Saudi Arabia for the import of about 2 million tonnes annually from each country.
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Morocco’s state-owned company OCP is the world’s largest DAP exporter. Saudi Arabia’s Ma’aden also exports DAP.
However, some imports also come from China and Russia. Industry sources say that imports from China are currently not open, which is why prices remain firm. Prices may be affected once exports from China resume.