Nutrient Based Subsidy Scheme (NBS)

The Nutrient Based Subsidy (NBS) Scheme is one of the major policies which guides the Union Government on providing subsidies for Phosphatic and Potassic (P&K) fertilizers. Unlike distributing subsidies on the basis of gross weight of respective bags of fertilizers, it considers the proportion of nutrients incorporated in them for calculating financial assistance.

For the Rabi 2025–26 crop year (1 October 2025 to 31 March 2026), the Union Cabinet had approved revised NBS rates for Di-Ammonium Phosphate (DAP) and customized NPKS. In order to ensure a continuous flow of fertilizers without disturbing farmers economically, a tentative expenditure of ₹37,952.29 crore was allocated by the Union Government for this financial year.

What is the Nutrient Based Subsidy Scheme?

The Nutrient Based Subsidy (NBS) Scheme was launched by the Department of Fertilizers (Ministry of Chemicals and Fertilizers) from 1 April 2010 to restructure the subsidy policy for non-urea fertilizers. It replaced the erstwhile product-linked subsidy policy with a nutrient-linked one.

For implementing it, a fixed subsidy rate in terms of rupees per kilogram is decided for each of the four major nutrients found in fertilizers:

• Nitrogen (N)
• Phosphate (P)
• Potash (K)
• Sulphur (S)

As India is dependent on imports for a sizeable share of raw materials, and the prices of these fluctuate widely in international markets, the Union Government revisits and updates it every year or two to ensure that the selling prices of fertilizers in the domestic market remain stable despite global price volatility.

Objectives of the NBS Scheme

The objectives of the NBS Scheme include:

• Making farm-gate prices of quality P&K fertilizers economical and affordable to marginal farmers.
• Promoting balanced use of nutrients by discouraging single nutrient application and encouraging multiple nutrient application through customized blends.
• Reducing the concentration of any particular nutrient in the soil, especially nitrogen.
• Making the process of calculating subsidy more transparent and predictable for manufacturers and importers of fertilizers.
• Driving competitiveness and efficiency in the fertilizer industry by incentivizing manufacturers to optimize utilization of resources, reduce wastage, and bring cost-effective products to the market.

Key Features of the Nutrient Based Subsidy Scheme

Subsidy Based on Nutrient Content

Under the NBS, the Union Government provides subsidy to manufacturers and importers of fertilizers based on the per unit price of each of the four major nutrients (N, P, K, S).

Unlike providing subsidies based on product, it calculates it on the basis of nutrient content of each bag of fertilizers. The government fixes NBS rates for different fertilizers for a crop year (April-March).

NBS Rates for Rabi 2025–26

For the Rabi 2025–26 season (1 October 2025 to 31 March 2026), NBS rates (per kg) have been notified by the Union Cabinet as the following:

Coverage of 28 P&K Fertilizer Grades

Under the NBS, the government provides a safety net for a wide range of P&K fertilizers, spanning from 25 different grades to 28 as of now.

In the previous crop year of Rabi 2023–24, it covered only 25 grades of fertilizers. However, for the coming crop year of Kharif 2024, three fortified fertilizer grades have been added:

• NPK 11:30:14 (Fortified with Magnesium, Zinc, Boron and Sulphur)
• Urea-SSP (5:15:0:10)
• SSP (0:16:0:11) (Fortified with Magnesium, Zinc and Boron)

These fortified blends are enriched with micronutrients to help address nutritional deficiencies in Indian soils.

As a result, the notified grades of fertilizers currently covered under NBS are 28, which include common ones such as DAP (Di-Ammonium Phosphate), MOP (Muriate of Potash), SSP (Single Super Phosphate) and various others such as NPK and NPKS complexes.

Freedom to Fix MRP

• Unlike urea, where MRP (Maximum Retail Price) is government-controlled, P&K fertilizers fall under decontrolled pricing.
• However, a fair MRP reflecting commercial expenses is decided by companies marketing these fertilizers in consultation with the government. The Union Government provides a per kg subsidy so that the final selling price remains economically viable for farmers.

Special Support for DAP

• Being the lifeline of major crops in India, the government has been providing special support for the procurement of Di-Ammonium Phosphate (DAP) whenever there is a threat of any supply-side disruptions.
• For both the Kharif 2025 and Rabi 2025–26 crop years, the Centre has provided a special package of ₹3,500 per tonne for DAP as well as imported Triple Super Phosphate (TSP).
• This provided relief to manufacturers against exorbitant freight and GST liabilities and helped maintain profit margins.
• With this special support, the Centre has managed to keep the retail price of DAP bagged at 50 kg at ₹1,350 in the Rabi 2025–26 season throughout the country, shielding farmers from global price hikes.

NBS Rates for Rabi 2025–26

The Union Cabinet has approved the new NBS rates for the Rabi 2025–26 crop year (1 October 2025 to 31 March 2026) on 28 October 2025.

For all the notified 28 grades of fertilizers, the subsidy rates (₹/MT) have been finalized. Some of the major categories of fertilizers and their NBS are as follows:

Budgetary Requirement for Rabi 2025–26

• To meet the expenses of providing subsidies to manufacturers of P&K fertilizers for the Rabi 2025–26 season, the Union Government has estimated a tentative budgetary requirement of ₹37,952.29 crore.
• It has increased by approximately ₹736 crore in comparison to the expenditure estimated for the previous Kharif 2025 crop year.

Why is Urea Not Covered under NBS?

• One of the most contrasting features of India’s fertilizer policy is that while urea has a statutory Maximum Retail Price (MRP), P&K fertilizers are decontrolled and their MRPs are market-determined.
• The MRP of a bag of 45 kg neem-coated urea has been fixed at ₹242 (excluding local taxes and dealer commission) since 1 March 2018.
• Under the government’s urea pricing policy, it undertakes to bear all the expenses incurred on excess freight and landed costs over and above the stipulated MRP.
• This creates a stark divergence in pricing structures of urea and P&K fertilizers.

Significance of the NBS Scheme

Affordable P&K Fertilizers to Farmers

• NBS serves as an important safety net for farmers as it takes away the risks involved in international price volatility of raw materials.
• By absorbing these price variations, NBS helps in making the essential nutrients available at affordable prices to marginal farmers.

Promotes Balanced Application of Nutrients

• NBS encourages farmers to buy fertilizers with a balanced combination of Phosphorus (P), Potassium (K) and Sulphur (S) alongside Nitrogen (N).
• By offering subsidies based on the nutrient content, it aims to offset the skewed demand for Nitrogen (N) in the form of Urea.
• It indirectly promotes the use of multi-nutrient fertilizers by making them economical. This, in turn, helps in addressing nutrient imbalance associated with excess use of Urea.

Greater Transparency in NBS

• As the Union Government calculates and distributes subsidy on the basis of percentage of nutrients, it has added a layer of transparency in the fertilizer subsidy policy.
• This has helped in minimizing the chances of malpractice by manufacturers.

Support for Availability of Fertilizers

• By announcing the rates of NBS in advance, the Union Government motivates manufacturers and importers to keep a stock of fertilizers so that there are no shortages at the time of sowing.

Encourages Participation of Industry

• With greater flexibility in fixing MRP and manufacturing blends of choice, manufacturers and importers get an opportunity to compete with each other on the basis of prices, thereby, promoting healthy industry practices.

NBS Scheme and Balanced Fertilizer Use

• Restoring the balance of nutrients in the soil is the basic objective of the NBS policy.
• Ever since the introduction of cheap urea, Indian farmers had been using it in disproportionate quantities over other fertilizers.
• The recommended fertilizer application varies according to soil conditions, crop requirements and agro-climatic conditions, but farmers have historically used nitrogenous fertilizers, particularly Urea, disproportionately compared with other fertilizers.
• NBS aims at correcting this by making it economical for farmers to use other fertilizers apart from Urea.
• It encourages them to adopt scientific methods of farming and replenishing the deficient nutrients in the soil without any financial burden.

Recent Developments under the NBS Scheme

A look at some of the major developments that have happened under the NBS scheme in recent years is as follows:

• During 2022-23 to 2024-25, the Union Government has allocated more than ₹2.04 lakh crore towards subsidies on domestic as well as imported P&K fertilizers.
• There has been a significant increase in domestic production of fertilizers. For instance, the domestic production of DAP and complex NPK fertilizers has increased from 112.19 lakh tonnes in 2014 to 168.55 lakh tonnes up to 30 December 2025.
• In Kharif 2024, three fortified grades have been added to cover micronutrient deficiency in Indian soils.

Challenges of the NBS Scheme

Despite the benefits offered by the NBS scheme, there are some challenges too which need to be taken care of:

Challenge of Imbalance in Subsidy Between Urea and P&K

• The biggest challenge before the government in case of NBS is to resolve the anomaly between urea and P&K subsidy regimes.
• Since the MRP of urea is fixed by the government, it is available at highly subsidized rates. On the other hand, the prices of P&K fertilizers are linked to the international prices of raw materials.
• The discrepancy between the pricing structure of urea and P&K fertilizers discourages farmers from using the latter even though they are essential for maintaining soil health.

International Price Volatility

• India is highly dependent on imports for a sizeable share of raw materials needed in manufacturing fertilizers.
• With frequent fluctuations in international prices, there is a big challenge involved in estimating the subsidy liability accurately under NBS.
• Apart from impacting the fiscal space of the government, it may also impede efforts at maintaining soil fertility.

Need for Advancing Nutrient Use Efficiency

• While the NBS has played a big role in promoting the balanced use of nutrients by making it economical for farmers to use fertilizers other than Urea, it is important to take measures for improving nutrient use efficiency (NUE).
• Unless farmers realize the need to follow scientific methods of nutrient management, the productivity of the soils will not improve manifold.
• They must be encouraged to get their soil tested periodically and adopt the best management practices identified by agricultural scientists.

Fiscal Sustainability

• Maintaining the nutrient balance in soils is essential for sustaining agricultural productivity and ensuring food security in the long run.
• However, continuing to provide huge subsidies under NBS will put tremendous pressure on the fiscal space of the government.
• It will have to constantly weigh the competing priorities of protecting the financial interests of farmers against ensuring fiscal sustainability.

FAQs on the Nutrient Based Subsidy Scheme

What is the Nutrient Based Subsidy Scheme?

It is a central policy under which the government calculates and disburses financial subsidies based on the specific per kg content of nutrients (N, P, K, and S) present in eligible non-urea fertilizers.

When was the NBS Scheme introduced?

The scheme was launched from 1 April 2010 to restructure the subsidy policy for Phosphatic and Potassic (P&K) fertilizers.

Which fertilizers are covered under NBS?

The scheme covers notified grades of P&K fertilizers which includes key products like DAP, MOP, SSP and various specialized NPK/NPKS complexes.

Is urea covered under the NBS Scheme?

No, it is not. Urea is excluded from the NBS framework and remains under a statutory price-control system.

What is the MRP of a 45-kg bag of urea?

The statutory MRP of a bag of 45-kg neem-coated urea is fixed at ₹242, excluding neem-coating charges and local taxes.

What were the NBS rates for Rabi 2025-26?

The approved nutrient rates were ₹43.02/kg for Nitrogen (N), ₹47.96/kg for Phosphate (P), ₹2.38/kg for Potash (K), and ₹2.87/kg for Sulphur (S).

What was the NBS subsidy for DAP in Rabi 2025–26?

The notified subsidy for DAP (18-46-0-0) was set at ₹29,805.

What was the budgetary requirement for NBS in Rabi 2025–26?

The tentative seasonal budgetary requirement was estimated at ₹37,952.29 crore.

What is the main objective of NBS?

Its main objective is to keep P&K fertilizers affordable and promote their balanced use alongside other fertilizers.