How Nano Fertilisers Can Optimise India’s Fertiliser Subsidy Burden

India’s fertiliser subsidy has evolved into a massive fiscal challenge, with annual expenditures now regularly crossing the ₹1.75 lakh crore mark. Because the government fixes the price of urea at a fraction of its actual cost—often paying over ₹2,400 in subsidy for a bag that a farmer buys for just ₹242—over 90% subsidy on the actual cost.

In India, the subsidy for nitrogenous and phosphatic fertilisers (other than urea) is managed under the Nutrient Based Subsidy (NBS) scheme, where the government provides a fixed amount based on the nutrient content while allowing companies to determine the retail price. For a standard 50 kg bag of Di-Ammonium Phosphate (DAP), the actual market cost can reach as high as ₹3,250 to ₹3,500 due to global volatility, yet the government provides a massive subsidy of approximately ₹2,000 to ₹2,150 per bag to keep the farmer's price capped at ₹1,350.

Similarly, for various nitrogen-phosphorus-potassium (NPK) complex grades, the landed cost often hovers around ₹3,000, with the government bearing a subsidy of roughly ₹1,200 to ₹1,800 per bag to ensure retail prices remain between ₹1,200 and ₹1,800. This means the government typically covers 60% to 70% of the total cost of these essential nutrients, shielding farmers from international price shocks that would otherwise make these fertilisers unaffordable.

This staggering outlay accounts for nearly 1% of India’s GDP, diverting critical capital away from essential rural infrastructure, like irrigation and cold storage, while simultaneously draining foreign exchange reserves to pay for imported raw materials.

The Subsidy Trap

The extreme affordability of these chemicals has unintentionally triggered a “subsidy trap” where farmers over-apply granular urea, leading to severe environmental degradation.

Currently, India’s nitrogen-phosphorus-potassium (NPK) ratio is heavily skewed away from the ideal balance, causing soil acidification and a decline in natural microbial health. Since conventional urea has a low nutrient use efficiency of only 30-40%, the unabsorbed chemicals leach into groundwater as nitrates, or run off into water bodies, causing toxic algal blooms and the release of nitrous oxide, a greenhouse gas (GHG) significantly more potent than carbon dioxide. This not only affects soil health, but also contributes to GHG emissions, particularly nitrous oxide, which has a global warming potential nearly 300 times as it traps 265-300 times more heat per molecule than CO₂ making it a highly potent Greenhouse Gas (GHG).

The emergence of nano fertilisers, particularly Nano Urea and Nano DAP, marks a significant shift toward precision agriculture in India. These advanced liquid fertilisers deliver nutrients at the nanoscale (> 100 nm), offering a highly efficient and eco-friendly alternative to traditional bulk fertilisers. Nano fertilisers, such as the biogenic and the chemical versions, offer a high-tech escape from this cycle by delivering nutrients with over 90% efficiency. Because these nanoparticles are absorbed directly through the plant’s leaves, they eliminate the wasteful leaching associated with soil-applied granules. Crucially, nano-urea, nano DAP, nano Phosphorous and Nano NPK are subsidy-free products, with potential to remove 25% to 50% of conventional fertiliser from the state recommended dose of fertiliser or the farmers’ practice.

If adopted across different states, nano fertilisers could help the government save between ₹12,00 to ₹2400 of subsidy burden per acre of agriculture field. Widespread adoption could potentially save the Indian economy tens of thousands of crores annually, while drastically reducing the chemical load on the environment.

According to some estimates, adoption of nano fertilisers could save the government an estimated ₹25,000 crore annually. Furthermore, increased domestic production of nano variants helps reduce the massive foreign exchange outflow spent on importing conventional fertilisers.

The Green Element

Adoption of nano fertilisers could also provide thrust to achieving Energy Efficiency and the "Green" Economy. The production and logistics of nano fertilisers are far more energy-efficient than their bulk counterparts. Producing one bottle of nano urea requires approximately 2.13 MJ of energy, whereas producing 1 kg of conventional nitrogen-based fertiliser requires about 60.6 MJ.

Replacing even 25% of conventional urea with nano variants would lead to massive national energy savings. Also, nano fertilisers provide logistical efficiency. Moving 45,000 grams of material (one bag) versus 1000 ml per acre (two bottles of 500 ml each for two sprays done at different plant-growth stages) transforms the supply chain. This reduces the requirement for thousands of heavy-duty trucks, lowering the overall fuel consumption and wear-on-infrastructure costs for the Indian economy. In addition, producing conventional fertiliser is highly reliant on natural gas (NG) as a feedstock—about 600 cubic metres per tonne. Due to the 1000-fold higher efficiency at the particle level, nano fertilisers can achieve similar effects with a fraction of the gas requirement, further reducing India's dependence on imported LNG.

Beyond fiscal and ecological gains, this transition provides a substantial boost to farmer income through improved productivity and reduced "hidden" costs. Field trials consistently show that precision nano-nutrition (nano fertilisers with reduced amount of conventional fertilisers) can increase 8% to 15% in field crops including paddy, wheat, maize, barley, as well as multiple vegetable crops–both leafy and fruit-bearing vegetables. Farmers also save significantly on logistics and labour; transportation and application; a lightweight bottle is far easier and cheaper than carrying heavy bags.

In addition, through the PM-PRANAM scheme, the government aims to return 50% of the subsidy savings back to local communities for agricultural development, ensuring that the move toward nanotechnology translates into tangible financial relief and modernised farming practices.

The shift toward nano fertilisers is more than a technological upgrade. It is an economic and environmental necessity for the developing India. By merging the industrial strength of producers like IFFCO, TERI, CFCL, PPL, ZFHL, CIL, Paradeep Phosphates and Ray Nano, and with the innovative spirit of Indian farmers, the country is well-positioned to achieve its goals of Atmanirbhar Bharat and carbon neutrality in agriculture.

(Vibha Dhawan is Director General, TERI, while Pushplata Singh is Director at Centre for Nano Research Area and Agricultural Biotechnology Area. The views expressed are personal.)