DAP: Di-Ammonium Phosphate

Imagine a bakery that needs two key ingredients for its bread, one it can grow in its own backyard and one it can only buy from a handful of overseas suppliers. India's most-used phosphate fertiliser sits firmly in the second category. Di-Ammonium Phosphate, or DAP, is a concentrated source of both nitrogen and phosphorus, the two nutrients a crop needs most after the soil's own reserves are depleted, and it is the second most consumed fertiliser in India after urea.

The trouble is that India simply does not have enough domestic capacity, or enough of the raw phosphate rock and ammonia DAP is made from, to meet its own demand. Roughly 70% of the DAP India uses is imported, mostly as finished fertiliser or as intermediate raw material processed domestically, making DAP pricing acutely sensitive to global phosphate rock and ammonia prices, and to the handful of countries, Morocco, China, Russia among them, that dominate global supply.

Because DAP is essential and farmers cannot simply absorb global price swings, the government subsidises it heavily under the Nutrient Based Subsidy system, and frequently tops that up with special additional packages when global prices spike. For Rabi 2025-26, the combined NBS and special subsidy on DAP reached roughly Rs 33,305 per tonne, among the highest per-tonne subsidies in the entire fertiliser system.

This creates a recurring fiscal tension. Every time global DAP or its raw material prices rise, the government faces a choice between raising the subsidy bill further or risking a shortfall that leaves farmers scrambling right before a sowing season, which is exactly the scenario special packages exist to prevent.

Whenever a sowing season approaches and headlines mention DAP shortages or subsidy hikes, that story usually traces back to the same root cause, a heavily used fertiliser that India still cannot produce enough of on its own.