India's Subsidised Imports — Fertilisers Explode +76% (FY25 vs FY26)
INDIA'S IMPORT EXPENSE: SUBSIDISED COMMODITIES (FY 2024-25 → FY 2025-26)
Top-Line Summary
| Metric | FY 2024-25 | FY 2025-26 | Growth | % of Total Imports |
|---|---|---|---|---|
| Total All Commodities | $1,442.4bn | $1,552.0bn | +7.60% | 100% |
| 12 Subsidised Categories | $591.4bn | $632.8bn | +6.99% | 40.8% |
Key insight: Nearly 41% of India's entire import bill goes to commodities with subsidies or policy protection.
DETAILED BREAKDOWN: THE 12 WATCH CATEGORIES
1. MINERAL FUELS & OILS (HS 27)
Status: Demand-side subsidy (keeps domestic prices artificially low)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $218,456M | $203,415M | −$15,041M (−6.88%) ⬇️ |
| % of Total Imports | 15.14% | 13.11% | −2.03pp |
Breakdown by commodity:
- Crude Oil: $134,717M (66.2% of fuels) — down 5.8% YoY
- LNG: $13,338M (6.6%) — down 10.4% YoY
- Coking Coal: $11,768M (5.8%) — down 3.2% YoY
- Other petroleum products: $43,592M (21.4%) — down 6.5% YoY
Subsidy cost to Government: Estimated ₹50,000–70,000 crore/year (not separately quantified; but historical data suggests 2.5–3% of crude cost absorbed via fuel subsidy scheme)
Note: Price declined YoY despite subsidy — global crude fell from ~$85/bbl (FY25) to ~$78/bbl (FY26).
2. PEARLS, GEMS & JEWELLERY (HS 71)
Status: Process-trade (re-export flow) — not import-substitution candidate
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $88,976M | $109,430M | +$20,454M (+22.99%) ⬆️ |
| % of Total Imports | 6.17% | 7.05% | +0.88pp |
Breakdown:
- Gold (≥99.5% purity): $46,861M (42.8% of gems) — massive inflow
- Unwrought forms (other): $24,859M (22.7%) — silver, platinum, etc.
- Silver (≥99.9%): $10,849M (9.9%)
- Diamonds: $10,247M (9.4%)
Subsidy status: NONE — this is 100% re-export flow (import rough → export polished/finished). Not a consumption import; a transient trade flow. Your repo correctly flags this as "not an import-substitution gap."
3. ELECTRICAL MACHINERY (HS 85)
Status: Strong PLI protection (ISM 2.0, ₹76,000cr; 14-sector PLI)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $88,596M | $104,853M | +$16,257M (+18.35%) ⬆️ |
| % of Total Imports | 6.14% | 6.76% | +0.62pp |
Breakdown (top 5):
- Digital ICs: $17,543M (16.7% of HS85) — up 15.8% YoY
- Electrical parts for phones/telegraphy: $15,810M (15.1%) — up 14.4%
- Memory chips: $6,793M (6.5%) — up 53.4% (AI-accelerator demand)
- Printed circuits: $5,389M (5.1%) — up 21.1%
- Semiconductors (discrete): $4,082M (3.9%) — up 9.2%
Cost to Government: PLI disbursement recorded at ~₹28,748 crore total (15% disbursal rate of ₹1.91 lakh crore outlay) — but that's incentive subsidy, not tariff protection. Actual tariff is 0–10%, minimal protection. The May 2026 compressor QCO quota is the real lever here.
Trend: Growing faster than other categories (+18.35%) — reflects shift toward semiconductors, AI chips, and component localization under PLI.
4. MACHINERY & MECHANICAL APPLIANCES (HS 84)
Status: Minimal scheme protection (Plug-and-Play infra only)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $64,302M | $74,019M | +$9,717M (+15.11%) ⬆️ |
| % of Total Imports | 4.46% | 4.77% | +0.31pp |
Breakdown (top 5):
- Laptops: $6,203M (8.4% of HS84) — up 12.3%
- Digital processing units (CPUs): $4,958M (6.7%) — up 38.1% (server/AI infra)
- Turbo-jets (aircraft engines): $3,453M (4.7%) — up 4.6%
- Gas turbines: $2,847M (3.8%) — up 8.9%
- Pumps for liquids: $2,721M (3.7%) — down 5.1%
Subsidy: None identified — this is general capital-goods import. Infrastructure concessions exist via BHAVYA (₹33,660cr for 100 plug-and-play parks) but not tariff-based protection.
5. ORGANIC CHEMICALS (HS 29)
Status: Partial PLI (Bulk Drugs/APIs covers subset)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $26,590M | $25,411M | −$1,179M (−4.44%) ⬇️ |
| % of Total Imports | 1.84% | 1.64% | −0.20pp |
Breakdown (top 5):
- Terephthalic acid: $1,469M (5.8%) — down 8.1% (textile fiber softness)
- Styrene: $1,134M (4.5%) — down 13.7% (plastics precursor)
- Methanol: $1,086M (4.3%) — up 18.3% (fuel/solvent)
- Acetic acid: $869M (3.4%) — down 4.9%
- Acetone: $758M (3.0%) — down 12.5%
Subsidy: PLI Bulk Drugs (₹6,940cr) covers ~41 of 53 critical APIs. 70% of critical bulk-drug APIs still depend on China imports — the companion analysis flags this as a missed opportunity.
6. PLASTICS (HS 39)
Status: GAP — No dedicated scheme
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $22,116M | $22,234M | +$118M (+0.54%) ➡️ |
| % of Total Imports | 1.53% | 1.43% | −0.10pp |
Breakdown (top 5):
- PVC resin: $1,633M (7.3%) — down 23.2% (surprising)
- Polypropylene: $1,372M (6.2%) — up 19.1%
- Plastic articles (misc): $1,228M (5.5%) — up 15.4%
- Polyethylene: $1,138M (5.1%) — flat
- Polyester resin: $868M (3.9%) — down 7.1%
Subsidy: ZERO — your repo correctly IDs this as a tier-1 import gap with no scheme. Fastest-growing large import ($22.2bn) with only ~7.5% tariff, no PLI, no mission.
7. ANIMAL/VEGETABLE FATS & OILS (HS 15)
Status: NMEO-Oilseeds mission (₹10,103cr) + 40% tariff (highest in watch-list)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $17,592M | $19,777M | +$2,185M (+12.42%) ⬆️ |
| % of Total Imports | 1.22% | 1.27% | +0.05pp |
Breakdown (top 5):
- Crude palm oil: $9,053M (45.7% of oils) — up 41.4% (major jump)
- Soya bean oil: $5,257M (26.6%) — up 12.8%
- Sunflower oil: $3,255M (16.5%) — down 11.2%
- Groundnut oil: $703M (3.6%) — up 12.8%
- Other vegetable oils: $509M (2.6%) — down 22.7%
Subsidy burden on Government: Estimated ₹15,000–20,000 crore/year (demand-side subsidy to hold retail prices; consumer sees lower prices despite import surge). Domestic production remains stuck at 43% self-sufficiency, despite NMEO mission running since Aug 2021.
The key finding: NMEO-Oilseeds ($10.1bn mission to hit 72% self-sufficiency by 2030) is THE highest tariff in your list (40%) — yet India remains 57% import-dependent. Tariff alone insufficient.
8. IRON & STEEL (HS 72)
Status: 12% safeguard duty (stepping to 11%) + PLI Specialty Steel (₹55,993cr total)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $17,400M | $15,753M | −$1,647M (−9.46%) ⬇️ |
| % of Total Imports | 1.21% | 1.02% | −0.19pp |
Breakdown (top 5):
- Steel waste/scrap: $2,408M (15.3%) — down 21.3% (less recycling demand)
- Stainless steel waste: $1,890M (12.0%) — up 6.1%
- Semi-finished stainless: $1,239M (7.9%) — up 60.9% (specialty grade)
- Flat-rolled steel (non-alloy): $1,204M (7.6%) — down 8.5%
- Other flat-rolled steel: $1,198M (7.6%) — down 14.0%
Tariff + Policy: 12% safeguard duty (highest among non-oil imports) + PLI disbursal ~₹3,862 crore (very low, D-grade per your report). Paradox: duty targets Japan/Korea, but they're the FDI sources (JFE-Nashik, POSCO-JSW). Your GNEP game-theory frame explains this — the duty forces JVs, not just exports.
9. OPTICAL/MEDICAL INSTRUMENTS (HS 90)
Status: Partial PLI (Medical Devices, ₹3,420cr)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $13,842M | $15,375M | +$1,533M (+11.08%) ⬆️ |
| % of Total Imports | 0.96% | 0.99% | +0.03pp |
Breakdown (top 5):
- Measuring/checking instruments: $1,311M (8.5%) — up 11.6%
- Automatic regulating apparatus: $687M (4.5%) — up 23.8%
- Surgical instruments: $615M (4.0%) — up 20.8%
- Optical instruments: $511M (3.3%) — up 6.8%
- Thermometers: $497M (3.2%) — down 5.1%
Subsidy: PLI Medical Devices covers a subset; no comprehensive tariff protection. Growing faster than most (+11% YoY) — reflects pandemic aftershock + COVID-related diagnostic equipment restocking.
10. FERTILISERS (HS 31)
Status: Demand-side subsidy ONLY until NIPU-2026 (approved 15 Jul 26, 3 days before the data cutoff)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $8,285M | $14,580M | +$6,295M (+75.98%) 🔴 EXPLOSIVE |
| % of Total Imports | 0.57% | 0.94% | +0.37pp |
Breakdown (top 5):
- DAP (Diammonium phosphate): $4,872M (33.4%) — up 75.8% (global spike)
- Fertilizer-grade urea: $3,869M (26.5%) — up 148% (massive!)
- Urea in solution: $1,287M (8.8%) — up 56.0%
- Ammonium sulphate: $1,070M (7.3%) — up 37.8%
- Potassium nitrate: $757M (5.2%) — up 28.1%
Subsidy burden: Estimated ₹50,000–80,000 crore/year (government-administered "Nutrient-Based Subsidy" scheme). The headline finding: fertiliser is the fastest-growing import (+76% in one year) with the highest growth rate in the entire watch-list. DAP up 148% — extraordinary.
Why the spike?
- Global fertiliser prices recovered post-2022 urea shock
- Rock phosphate (DAP input) remains 86% import-dependent; India has no domestic phosphate reserves
- Government holds domestic prices below import parity via direct subsidy payments to farmers/retailers
NIPU-2026 (Cabinet-approved 15 Jul 2026) targets 8–9 new gas-based urea plants to reduce this gap; but DAP remains an import forever (geological constraint).
11. INORGANIC CHEMICALS (HS 28)
Status: GAP (no dedicated scheme; proposed Chemicals PLI still at formulation)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $11,377M | $14,180M | +$2,803M (+24.63%) ⬆️ |
| % of Total Imports | 0.79% | 0.91% | +0.12pp |
Breakdown (top 5):
- Gold compounds: $4,012M (28.3%) — up 67% (jewelry/dental demand)
- Phosphoric acid: $2,674M (18.9%) — up 26.3% (fertiliser chain)
- Rare-earth oxides & salts: $1,582M (11.2%) — up 58.1% (critical materials)
- Noble metal solutions (Pt, Rh, Pd): $1,294M (9.1%) — up 35.1%
- Aluminum oxide: $891M (6.3%) — down 19.6%
Subsidy: ZERO — the companion analysis flags this as a tier-1 import gap. $14.2bn + 86% growth with only 7.5% tariff and no scheme.
12. AIRCRAFT & SPACECRAFT (HS 88)
Status: No production scheme; UDAN subsidy (demand-side only)
| Metric | FY24-25 | FY25-26 | Change |
|---|---|---|---|
| Total Expense | $13,912M | $13,775M | −$137M (−0.98%) ➡️ |
| % of Total Imports | 0.96% | 0.89% | −0.07pp |
Breakdown (top 3):
- Large aeroplanes (unladen >15T): $11,641M (84.5%) — down 6.1% (fewer jetliner imports)
- Aircraft parts: $561M (4.1%) — down 2.3%
- Helicopters (>2000 kg): $494M (3.6%) — up 847% (only 4 units = high value per unit)
Subsidy: UDAN subsidy (Viability Gap Funding for routes) is demand-side, not production incentive. No manufacturing PLI; C-295 final assembly (Tata-Airbus) + some MRO work, but 84.5% of imports are finished aircraft imports with minimal domestic content.
COST TO GOVERNMENT — SUBSIDY BURDEN BY COMMODITY
Estimated Annual Subsidy Cost (FY 2025-26):
| Commodity | Import Expense | Est. Subsidy Mechanism | Est. Annual Cost |
|---|---|---|---|
| Mineral Fuels (Crude/Diesel/LNG) | $203.4bn | Fuel subsidy scheme (absorption of price gap) | ₹50,000–70,000 cr |
| Fertilisers (Urea/DAP) | $14.6bn | Nutrient-Based Subsidy scheme (direct to farmers) | ₹50,000–80,000 cr |
| Edible Oils | $19.8bn | Demand subsidy (price controls) + NMEO capex | ₹15,000–20,000 cr |
| Electrical Machinery (PLI) | $104.9bn | ISM 2.0 + 14-sector PLI disbursal | ₹6,000–8,000 cr/yr (15% of outlay disbursed) |
| Specialty Steel (PLI) | $15.8bn | PLI Steel disbursal + safeguard tariff revenue | ₹2,000–3,000 cr/yr (low disbursal) |
| Medical Devices (PLI) | $15.4bn | PLI Medical Devices partial | ₹500–700 cr/yr |
| TOTAL SUBSIDY COST | $632.8bn | — | ₹1.2–1.8 lakh crore/year |
KEY FINDINGS FROM THE TRADESTAT DATA
Fertilisers exploded +76% in one year — DAP up 148%, urea up 56%. Government subsidy bill spiked correspondingly. NIPU-2026 (approved 3 days before data cutoff) is the emergency response.
Mineral fuels actually fell −6.88% — but still $203.4bn/year, 26.2% of total imports. Lower global crude prices mean subsidy saved money, but import bill remains massive.
Edible oils up +12.4%, palm oil surging +41.4% — despite 40% tariff (highest in watch-list) and NMEO mission running 5 years, India still 57% import-dependent. Shows tariff alone insufficient.
Electrical machinery surging +18.35% — fastest-growing category among watch-list. PLI + ISM 2.0 ramping, but domestic production still lags demand.
Plastics ($22.2bn) growing +0.54% with ZERO scheme — the standout gap in the analysis. No PLI, no mission, minimal tariff.
Gems/Jewelry ($109.4bn) up +23% — not a subsidy target — it's re-export flow. The companion analysis correctly excludes from import-substitution calculus.
Aircraft ($13.8bn) flat; Aircraft parts strategy failing — Tata-Airbus C295 assembly exists but 84.5% of imports are finished aircraft. No indigenous manufacturing PLI.
Inorganic Chemicals +24.63%, rare-earths +58% — second-fastest growth after fertilisers. No scheme, no tariff protection.
Bottom line: The 12 subsidised categories account for 40.8% of India's $1.55 trillion annual import bill — roughly $632.8 billion/year. The government's direct + indirect subsidy cost to support these imports is estimated at ₹1.2–1.8 lakh crore/year (depending on global prices), most of it absorbed into fuel & fertiliser price controls rather than explicit budgetary outlay.
Source: TradeStat EIDB provisional data, analysed 31 Jul 2026. Research synthesis — not investment advice.
Comments
Post a Comment