Nutrient Based Subsidy (NBS) Scheme

The Nutrient Based Subsidy (NBS) Scheme is the system India uses to give subsidy on fertilisers other than urea, mainly phosphatic (P) and potassic (K) fertilisers like DAP and MOP. Under it, the government fixes a subsidy for each kilogram of nutrient (nitrogen, phosphorus, potash and sulphur) inside a fertiliser. The company then gets a subsidy based on how much of these nutrients its product contains. Unlike urea, the selling price of these fertilisers is not fixed by law.

Why does it exist?

Plants need many nutrients, not just nitrogen. The three main ones are nitrogen (N), phosphorus (P) and potassium (K). Before 2010, the subsidy on P and K fertilisers was paid product by product, which did not encourage balanced use or new products. NBS links the subsidy to the actual nutrients in the bag. The idea was to encourage farmers to use a balanced mix of nutrients, to allow new, better fertiliser grades to enter the market, and to keep the subsidy bill under control.

Where did it come from?

• Until 1992, P and K fertilisers were also under price control.
• A Joint Parliamentary Committee on Fertiliser Pricing gave its report on 20 August 1992. It recommended freeing P and K fertilisers from control, while keeping urea controlled.
• From 25 August 1992, the prices, movement and distribution of P and K fertilisers were decontrolled. Prices shot up, so the government soon brought in a Concession Scheme for these "decontrolled" fertilisers. This ran until 31 March 2010.
• The NBS Scheme started on 1 April 2010, run by the Department of Fertilisers.

How does it work?

Let us understand it with a simple example. A bag of DAP (Di-Ammonium Phosphate) is labelled "18-46-0". This means it contains 18% nitrogen and 46% phosphate (counted as P₂O₅) and no potash.

1. The Union Cabinet approves a subsidy rate per kg of each nutrient for each season. Kharif runs from 1 April to 30 September; Rabi runs from 1 October to 31 March.
2. For Rabi 2025-26, the rates were ₹43.02 per kg of N, ₹47.96 per kg of P, ₹2.38 per kg of K and ₹2.87 per kg of S (sulphur).
3. One tonne (1,000 kg) of DAP has 180 kg of N and 460 kg of P. So the subsidy is (180 × 43.02) + (460 × 47.96), which is about ₹29,805 per tonne.
4. On top of this, the government sometimes adds a special package for DAP. In Rabi 2025-26, this was ₹3,500 per tonne, taking the total DAP subsidy to about ₹33,305 per tonne.
5. The company is paid this subsidy after the sale is recorded on PoS machines, the same as for urea.

For Kharif 2026, the rates were raised to ₹47.32 (N), ₹52.76 (P), ₹2.38 (K) and ₹3.16 (S) per kg, with an estimated budget of about ₹41,534 crore for the season.

Who sets the price?

Under NBS, companies fix the MRP of P and K fertilisers, but it must be "reasonable", and the government monitors it. In practice, the government has kept DAP at ₹1,350 per 50-kg bag (₹27,000 per tonne) since the COVID-19 period, by raising subsidies and giving special packages.

The key parts and facts

• Nutrients covered: N, P, K and S.
• Grades covered: 28 grades of P and K fertilisers, including DAP, MOP, and many NPK "complex" fertilisers.
• Important products: DAP (18% N, 46% P₂O₅), the second most used fertiliser after urea; MOP (Muriate of Potash), the main potash fertiliser, which India imports almost entirely because it has very little commercially mined potash; SSP (Single Super Phosphate), a cheaper phosphate fertiliser that also supplies sulphur.
• Rates are reviewed every season (twice a year).
• Urea is not part of NBS.

India's position and Indian examples

India depends heavily on imports for P and K. It imports finished DAP, and also raw materials like rock phosphate and phosphoric acid, mainly from countries in West Asia and North Africa. So any global shock, such as conflict in West Asia, quickly raises the NBS bill. Related schemes include the Soil Health Card Scheme (launched in 2015), which tests soil and tells farmers which nutrients their field needs, and PM-PRANAM (2023), which rewards states that cut chemical fertiliser use.

Commonly confused concepts

• NBS vs urea policy: NBS fixes the subsidy, and the price can float. Urea policy fixes the price, and the subsidy floats.
• Nutrient vs fertiliser: A nutrient (N, P, K, S) is the chemical element the plant needs. A fertiliser (DAP, MOP) is the product in the bag that contains one or more nutrients.
• P vs P₂O₅: Phosphorus in fertilisers is counted as phosphate (P₂O₅). When NBS says "P", it is applied to the P₂O₅ content shown on the bag.
• Decontrolled vs unsubsidised: P and K fertilisers are "decontrolled" (price not fixed by law), but they still get a large subsidy.

Issues, criticism and the way forward

• Urea left out: Because urea is outside NBS and kept very cheap, farmers use far more nitrogen than needed, and the N:P:K balance gets badly skewed.
• Price control by another route: Critics note that by asking companies to keep DAP at a fixed price and paying special packages, the government has made NBS behave like a controlled system again, which weakens the idea of market-based pricing.
• Import dependence: Global price swings in phosphate and potash directly raise India's subsidy bill and can cause shortages during the sowing season.
• Delayed payments: Companies sometimes complain of subsidy payment delays, which strain their finances.
• Way forward: Experts suggest bringing urea under NBS, linking fertiliser use to soil tests, securing long-term import deals and overseas mines for rock phosphate and potash, and promoting organic manure and bio-fertilisers.

Concepts to Know

• Phosphatic fertiliser: A fertiliser that supplies phosphorus, which helps roots grow and plants flower.
• Potassic fertiliser: A fertiliser that supplies potassium (potash), which helps plants resist disease and drought and improves grain quality.
• Kharif and Rabi: India's two main crop seasons. Kharif crops (like rice) are sown with the monsoon; Rabi crops (like wheat) are sown in winter.
• Decontrol: Removing the government's power to fix the price of a product.
• Special package: Extra subsidy given on top of the normal NBS rate, usually to keep the price of a key fertiliser like DAP stable.