NEW DELHI: The department of fertilizers plans to ask qualified bidders in National Fertilizers Ltd’s 1.7 million-tonnes urea import tender to match the lowest quoted prices, according to three people aware of the development. The move is aimed at securing additional volumes at sharply lower rates and easing pressure on the government’s fertilizer subsidy bill.
Floated on 27 May, the tender attracted bids from 27 suppliers for 6.25 million tonnes against a requirement of 1.7 million tonnes, reflecting strong competition as global urea prices have retreated from elevated levels seen during supply disruptions linked to the West Asia conflict.
Aditya Birla Global Trading emerged as the lowest bidder for India’s east coast at $444.9 per tonne for 500,000 tonnes, while Ameropa Asia secured the west coast at $449.3 per tonne for 234,000 tonnes, one of the people said, requesting anonymity.
With 734,000 tonnes awarded to the two lowest bidders, the department is expected to seek matching offers from the remaining 25 qualified participants to finalize nearly 1 million tonnes of additional supply, the people said.
The tender attracted landed price bids of $444.9–$449.3 per tonne, sharply lower than $935–959 per tonne seen in an earlier procurement tender floated on 4 April. The government bought the full 2.5 million tonnes sought in that purchase.
“We are in the process of finalizing the remaining quantity and hope to finalize it soon,” Bandana Preyashi, joint secretary in the department of fertilizers told Mint, adding that India has already secured 5 million tonnes of fertilizers since the West Asia war erupted in late February.
Queries emailed to the spokesperson of the fertilizer department remained unanswered till the press time.
Subsidy pressure
The department’s efforts to secure imports at lower prices could help ease pressure on the fertilizer subsidy bill, one of the Centre’s largest farm-sector expenditures.
Mint reported earlier this month that the department had sought a 100% increase in fertilizer subsidy to ₹3.5 trillion for FY27 from the finance ministry, citing mounting losses at manufacturers forced to sell fertilizers at subsidised rates even as input costs rose following disruptions linked to the West Asia conflict.
The government had budgeted ₹1.77 trillion for fertilizer subsidy in the current fiscal year, but higher import costs have strained the outlay. The subsidy bill had already crossed ₹2.17 trillion in FY26.
India, one of the world’s largest importers of urea and diammonium phosphate (DAP), relies heavily on imports to meet domestic fertilizer demand. It sources about 60% of its DAP requirement and roughly 15% of its urea and NPK (nitrogen, phosphorus, potassium) needs.
For the kharif season, fertilizer demand has been assessed at 38.39 million tonnes, while stocks stood at 19.66 million tonnes as of 15 June, more than half of seasonal requirements and well above typical levels at this stage.
“While the department is likely to request other bidders to match the L1 bid, there is no obligation on their part to do so. It ultimately depends on their commercial assessment,” the first person said.
Market participants expect fertilizer prices to soften further if stability returns to West Asia following the initial US-Iran agreement.
“Prices of urea have already come down, we expect that with the US-Iran peace agreement the prices of DAP, Sulphur and ammonia will moderate substantially in the near future, while availability is likely to improve. Thus, it will help in reducing the government outgo towards the subsidy bill,” added Dr. Sachchida Nand, a visiting professor at the Indian Council for Research on International Economic Relations (ICRIER).
Kalyan Goswami, director general, Agrochem Federation of India, an industry association, said, “With the US-Iran peace deal, the Strait of Hormuz will be reopened. Looking at energy flows and inflation outlooks, this is welcome relief for India, as we import large volumes of fertilisers & agrochemical ingredients to meet domestic agricultural demand.”
Experts said lower prices are also being driven by improving global supply conditions.
“Global urea prices have already softened as was witnessed in the recent tender opened in India wherein prices have already reached $450/MT as China has restarted urea exports. The restoration of supplies from West Asia should bring down the prices further,” said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra Ltd.
The remaining quantity is expected to be allocated from bids submitted by more than two dozen qualified international traders and producers, including Aramco Trading, Sabic, Samsung, Saftco, Indorama India, Fertiglobe and Koch Fertilizer.