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Key Takeaways
The latest tender issued by India to import urea, initiated by the government company NFL, has received bids at prices between $445 and $449 per tonne (CFR). These prices are more than 50% lower than those quoted in the April tender by IPL, which were around $935-$959 per tonne.
The turnaround happened quickly. The price crash came after China reopened urea exports, which had been under control since March 2026.
The relief comes after months of fiscal stress. India’s fertiliser subsidy costs have shot up to about ₹3.4 trillion because of the conflict in West Asia, from ₹1.7 trillion estimated in the initial budget for FY27.
The highest costs before this were ₹2.5 trillion incurred in FY23 following the Russia-Ukraine war. The risk of another such spike remains, but lower import prices now offer a window to contain damage before it widens further.
The timing matters for India’s farmers. The NFL’s tender specifies that all contracted cargoes must be loaded by July 20. It enables fertiliser to arrive in India by August and be available for the latter part of the kharif season.
India imported a record 11.17 million tonnes of urea in FY 2025-26, valued at $5.16 billion, compared with 6.91 million tonnes worth $2.38 billion in FY 2024-25.
The price drop will not flow directly to farmers at the retail counter. Urea is sold at a fixed maximum retail price, so the benefit passes to the government through a lower subsidy burden.
Domestic urea production has also fallen from around 2.5 million tonnes per month to 1.7-1.8 million tonnes due to gas supply disruptions. Cheaper imports plugging that gap help ensure supply is not a concern during the sowing season.
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A senior industry official told Business Standard, “At least on the East Coast of India, a large chunk of the supplies will be coming from China due to geographical proximity.”
Against the tender for 1.7 million tonnes, bids equivalent to around 6.24 million tonnes were received from 34 firms. That level of surplus interest shows how much supply China’s re-entry has unlocked.
The catch, however, is timing. The same official cautioned that the comfortable supply situation may last only until August 2026, after which China could again impose stringent curbs on exports.
According to an ICRIER report, nearly 85% of the gas used in India’s urea production is imported, largely from West Asia. The fertiliser sector accounts for nearly 29% of India’s total natural gas consumption. That structural dependence will not ease in one season.
The fall in urea import prices from $959 to $449 per tonne gives India a brief but important fiscal cushion before kharif demand peaks. A subsidy bill already on track to double needs every correction it can get. The government must use this window to secure volumes before China tightens exports again after August 2026.
Why did urea import prices fall by 50% in India's latest NFL tender?
The most recent NFL bid of India came for $445 to $449 per tonne compared to $935 to $959 per tonne in April. It is due to the fact that China eased the restrictions on the export of urea, which were in place since March 2026.
Has India approached China for urea supplies amid the West Asia crisis?
Yes. India requested that China relax its restrictions on exports. This is due to a disruption in gas availability and a reduction in indigenous urea production from 2.5 million tonnes to 1.7-1.8 million tonnes per month because of the West Asia crisis. China acted accordingly in June 2026, and tenders of 6.24 million tonnes were received for 1.7 million tonnes.
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