The Prime Minister Narendra Modi-led Cabinet on Wednesday approved $6.2 billion for domestic firms as compensation to sell fertilizers to farmers at a lower than market prices.
The nutrient-based subsidy rates for phosphatic and potassic fertilizers are meant for the winter planting season ending March 2023. During this period, Indian farmers plant wheat, pulses, and coarse cereals, among others.
The compensation to fertilizer firms will enable the availability of fertilizers at a time of elevated global prices of the commodity.
"The volatility in the international prices of fertilizers and raw materials has been primarily absorbed by the Union Government," a government statement reads.
As per industry data, phosphate prices have climbed by 190 percent, while potash prices have jumped by 280 percent over the past two years due to supply disruptions as a result of the COVID-19 pandemic and geopolitical tensions in Europe.
Western sanctions against Russia have also exacerbated the supply disruption, since at least 32% of global potash production capacity is located in Russia and Belarus.