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Fertiliser Industry seeks policy reforms, GST relief to improve sector viability
Dec-11-2025

Fertilizer Association of India (FAI) has sought a slew of policy reforms, including extension of nutrient-based subsidy (NBS) to urea, transparent subsidy mechanisms and resolution of GST-related input tax credit (ITC) accumulation to improve sector viability and attract fresh investments. However, it flagged the persistent imbalance in nitrogen-phosphorus-potassium (NPK) application that has severely impacted soil health and diminished the fertiliser-to-grain response ratio. 

The sector also sought reforms to simplify the Fertilizer Control Order (FCO) and provide operational flexibility for faster introduction of newer products to enhance ease of doing business. On phosphogypsum, the industry called for GST rate rationalisation and promotion of its usage in road infrastructure to support utilisation and create opportunities for new phosphoric acid facilities to boost domestic production. FAI positioned single super phosphate (SSP) as a true 'Make in India' fertiliser that could serve as an alternative to imported DAP, urging stable NBS rate implementation and continuity of freight subsidy to improve capacity utilisation.

The FAI Chairman S Shankarsubramanian flagged mounting cost pressures from higher energy prices, escalating logistics expenses and mandatory compliance requirements that have particularly hit older urea units operating on vintage technology. He said ensuring a fair and timely revision of fixed costs is essential for sustaining operations and encouraging future investments. This reform has been pending for a long time and your immediate support can provide much-needed relief. He welcomed the government's decision to pilot direct benefit transfer (DBT) linkage to farmers based on land holdings, saying it would promote balanced fertiliser use and empower farmers to make informed decisions based on soil health. 

Appreciating the recent GST rate reduction from 18 per cent to 5 per cent on key raw materials, he pointed to a structural mismatch due to subsidy resulting in substantial input tax credit (ITC) accumulation. He noted that farm-level fertiliser consumption improved 10 per cent to 71 million tonnes in 2024-25, resulting in record foodgrain production of 358 million tonnes. First-half consumption in the current year was up 4 per cent, with initial estimates indicating another record output season. 


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