3 min readJun 15, 2026 06:05 AM IST First published on: Jun 15, 2026 at 06:05 AM ISTIn mid-February, 10 days before the United States-Israel strikes on Iran, the state-owned Rashtriya Chemicals and Fertilisers contracted about 1.3 million tonnes (mt) of urea imports at a landed price of $508-512 per tonne. Two months later, that price nearly doubled to $935-959 per tonne for a 2.5-mt import tender of Indian Potash Ltd. However, National Fertilisers Ltd’s latest tender for import of 1.7 mt, which opened on June 8, saw bids as low as $444.9-449.3 per tonne. The price crash — to below pre-War levels — comes amid a partial lifting of export restrictions by China and fading fears of prolonged war-induced supply disruptions. Contrast this with the situation till early this month, when the Centre’s fertiliser subsidy bill for 2026-27 was projected to touch Rs 3,40,000 crore, as against the budgeted Rs 1,70,799 crore.It’s not clear if the above price drop is a one-off affair, triggered by hopes of a US-Iran deal to reopen the Strait of Hormuz, through which roughly a third of the globally traded fertiliser products passed prior to the conflict. The expectation of global supply chain pressures easing has been combined with El Niño conditions developing in the equatorial Pacific Ocean and the US National Oceanic and Atmospheric Administration predicting it to become a “very strong” event by October. El Niño, to the extent it moderates fertiliser demand in key agricultural regions of the world, will add to the weakening of price pressures from supply-side relief. That matters for India, not the least because much of its fertiliser requirement — whether in finished form or as raw materials and intermediate chemicals — is imported. In 2025-26, the country imported $27.2 billion worth of fertilisers and inputs. The current fiscal could see that surpass the record $33.4 billion of 2022-23, post Russia’s invasion of Ukraine. The exchequer outgo on subsidy is over and above.AdvertisementThe Narendra Modi government should view the cooling of global fertiliser prices as a temporary reprieve. It provides the space for carrying out much-needed reforms in India’s farm subsidy architecture. This newspaper has for long argued in favour of shifting from market-distorting product-specific subsidies —be it for inputs (fertilisers, water and electricity) or crops (through minimum support prices disconnected from demand and supply) — to direct farm income support. Farmers should grow what the market wants. And they must do so efficiently, which means paying the scarcity value of water, energy and imported inputs. The goal of reforms is to nudge them in this direction, unlike ad hoc interventions that only kick the can down the road.