Dragon fire extinguished! How India has successfully countered China's fertilizer export blocks; seen as ‘supply chain weaponisation…'
India seems to have found an effective solution to China's move of blocking fertilizer exports to India. In May-June, China abruptly escalated tensions regarding fertiliser exports by stopping inspections of shipments destined for India.
India believes that Chinese suppliers received unofficial instructions to halt India-bound deliveries, according to an ET report. This development triggered serious concerns in New Delhi, prompting swift action to contain the situation to a single season and prevent domestic disruptions.
How Did China Look to Choke India's Fertilizer Supply?
China's export restrictions on fertilisers to India represents one of the most severe instances of supply chain manipulation and weaponzation by Beijing, according to an ET analysis.
The timing of China's action was particularly challenging as it coincided with the Kharif season, causing significant DAP (Diammonium Phosphate) shortages across Indian states.
The situation became more complex as it emerged during India's "Operation Sindoor" against Pakistan, especially noteworthy given India's military authorities' concerns about China's support to Pakistan.
The incident highlights the critical necessity to assess India's supply chain dependencies on China across various industries.
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How Has India Countered China's Fertilizer Move?
India has successfully navigated through a challenging fertiliser crisis with China through significant diplomatic endeavours.
As preparations for the Rabi season distribution commence by month-end, it's worth noting that India's previous DAP imports from China were around 22 lakh metric tonnes.
Whilst managing issues related to terrorism, trade and Trump, India has engaged in extensive diplomatic initiatives over several months to secure adequate DAP supplies before the Rabi season distribution, typically beginning in July-end.
Saudi Arabia and Morocco have emerged as crucial partners in helping India counter China's supply chain pressures.
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Following diplomatic negotiations, India secured agreements with Saudi Arabia for supplying 10 lakh metric tonnes of DAP through a long-term arrangement totalling 31 lakh metric tonnes.
Additionally, Morocco agreed to provide 5 lakh metric tonnes, leaving a deficit of 7 lakh metric tonnes.
The shortfall may be partially addressed through domestic reserves, whilst discussions continue with Russia to enhance exports, considering fertiliser remains outside sanctions.
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Government projections indicate sufficient stocks for the upcoming Rabi season. India continues to pursue additional arrangements, approaching various nations including Egypt, Nigeria, Togo, Mauritania and Tunisia to establish a more diverse supply network.
Since 2023, Beijing has reduced its pace in renewing and establishing new fertiliser agreements with India. This led to increased procurement from Saudi Arabia as Indian firms anticipated supply constraints, despite Chinese rates being more economical.
India's immediate response appears successful, having secured alternative sources through Saudi Arabia, Morocco and potentially Russia for Diammonium Phosphate (DAP), which ranks as India's second most utilised fertiliser after urea.
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