04-07-2025
Conflict in Middle East: As world watches oil, why India must watch its fertiliser supply
While global headlines focus on oil prices in the wake of the Iran-Israel conflict, an equally urgent concern is fertiliser security, especially for an agriculture-driven country like India. Fertiliser is a quieter and less visible crisis, but it hits directly at the heart of food production, making it a national stability issue, experts warn.
Dr Shadman Zafar, assistant professor at Narsee Monjee Institute of Management Studies (NMIMS) in Hyderabad, explains how escalating tensions in the Middle East could seriously impact India's fertiliser supply chain, and by extension, its food security.
India imports a significant proportion of its fertilisers (like DAP, urea, etc.). How vulnerable are we to disruptions in Middle Eastern supply chains, particularly amid the Iran-Israel conflict?
India's fertiliser security is deeply tied to the Middle East as the country relies heavily on countries like Qatar, Saudi Arabia, and Oman for both finished fertilisers and natural gas — the key raw material used to produce them.
In 2023, India imported about 20-25% of its total fertilisers from Gulf countries. Most of these imports travel through the Strait of Hormuz, a narrow but crucial shipping route connecting India to the Gulf. If tensions in the region escalate and this passage is disrupted, it could impact the supply chain seriously, driving up global prices of fertilisers and natural gas, thus affecting Indian farmers and food production.
Which types of fertilisers are most at risk currently?
Among the three key fertilisers, India imports about 20% of its urea, around 60% of diammonium phosphate (DAP), and 100% of muriate of potash (MOP). A significant share of urea and DAP comes from Gulf countries, making them more vulnerable to disruptions in the region. In contrast, MOP is imported from other sources like Canada, Belarus, and Israel — involved in conflict with Iran now.
Given this, the most affected items will be urea, DAP, and natural gas (used as feedstock for urea production). Urea and DAP, being tied to Gulf suppliers, face immediate risk if regional shipping lanes are affected.
Is India prepared for such geopolitical disruptions in fertiliser imports?
India's fertiliser procurement strategy is built around long-term import agreements with countries like Oman, Qatar, and Saudi Arabia — particularly for urea. The import and distribution process is centrally managed by public sector undertakings (PSUs). The Government decides how much fertiliser is to be sold, where it should be distributed, making it one of the most tightly regulated sectors.
The strategy traditionally prioritises cost-effectiveness and assured supply, but with global disruptions becoming more frequent, the focus needs to shift toward building resilience into the system. The Russia-Ukraine war exposed these vulnerabilities, yet the system has not evolved much.
Does India maintain strategic reserves of fertilisers, like it does for food or oil?
No, India does not maintain large-scale strategic reserves of fertilisers. Companies like Indian Farmers Fertiliser Cooperative (IFFCO) Limited, Rashtriya Chemicals and Fertilizers (RCF) Limited, and National Fertilizers Limited (NFL) keep only operational stock for 30-45 days. This limited buffer means any international disruption can quickly translate into domestic shortages, especially critical during sowing seasons like Kharif (June-July) and Rabi (October-November).
Having strategic reserves would help stabilise the domestic supply, as well as provide the Government more flexibility to renegotiate contracts or explore alternative sources amid disruptions.
Can India diversify fertiliser imports or ramp up domestic production quickly?
India is working to diversify fertiliser imports and boost domestic urea production, aiming for 90% self-sufficiency by 2025 through revived plants like Gorakhpur and Sindri. However, self-reliance is limited for phosphatic and potassic fertilisers due to lack of raw materials. Thus, India is pursuing joint ventures abroad — like with Morocco's OCP.
Despite diversification post-Russia-Ukraine war, dependency on the Middle East remains high. Expanding sources is challenging due to logistics and distance. In the short term, India must broaden its supplier base and build reserves, while the focus in the medium term should be on resilience through domestic production and overseas investments, not complete self-sufficiency.
What is stopping India from becoming fully self-reliant in fertilisers?
India's fertiliser sector faces several structural and policy challenges that limit self-sufficiency. While the final production capacity is improving, dependence on imported raw materials, essential for many fertilisers, remains its Achilles' heel. Diversification is still narrow, making the sector vulnerable to recurring global conflicts like Iran-Israel and Russia-Ukraine.
Many plants are old or energy-inefficient, and distribution delays — from ports to farms — worsen during peak seasons. Alternatives like nano, bio, and organic fertilisers are yet to scale meaningfully. Most importantly, policymaking remains reactive rather than forward-looking, responding to crises instead of anticipating them.
How protected are small and marginal farmers from these global shocks?
Only partially. India's fertiliser subsidy system aims to protect small and marginal farmers from global price shocks, but its effectiveness depends on the type of fertiliser. Urea is sold at a fixed maximum retail price (MRP), fully subsidised by the Government, but DAP and MOP fall under the nutrient-based subsidy (NBS) scheme, in which rising global prices can raise retail costs for farmers. Delays in subsidies, supply disruptions, and lack of awareness further weaken protection for small holders who often bear the brunt during crises.
Support schemes like Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) offer limited relief as they are not directly linked to rising input costs. The system keeps urea affordable, but at a cost — as the Government absorbs global price shocks, the fertiliser subsidy bill continues to rise. This rising fiscal burden often comes at the expense of long-term public investment in agriculture like irrigation, extension services, and infrastructure, potentially hampering agricultural growth in future.
Should fertilisers be included in India's national security planning, given their critical role in food security?
Absolutely. In an input-intensive agricultural economy like India, fertilisers are as strategic as oil. Any disruption risks the harvest, as well as threatens fiscal stability, rural incomes, and overall food security. To achieve self-reliance, in agricultural output and in inputs that make it possible, fertiliser security must be treated as a matter of national security. Ensuring stable and affordable fertiliser supply is ultimately about safeguarding India's food system and the livelihoods of millions who depend on it.
Is this crisis similar to the one triggered by the Russia-Ukraine war? What have we not learned?
The Iran-Israel conflict poses fertiliser supply risks much like the Russia-Ukraine war, yet India has not acted on the key lessons. Despite facing severe disruptions in 2022, India still lacks a fertiliser buffer stock policy and minimum stocking norms for critical DAP and MOP imports. Also, there are no strong incentives for farmers to shift away from synthetic fertilisers.
While the Russia-Ukraine war disrupted nitrogen, potash, and ammonia supplies, the current conflict threatens ammonia, urea, DAP, and liquified natural gas (LNG) — all vital for agriculture. As a result, India remains exposed to price shocks, shipment delays, rising subsidy burdens, and potential unrest during sowing seasons.
What international partnerships can help India secure its fertiliser in future?
India should strengthen long-term supply agreements with key partners. With Morocco, efforts must move beyond MoUs to equity stakes and joint ventures, especially since it holds 70% of global phosphate reserves. For potash, Canada remains a reliable source due to its political stability, while Jordan and Israel can help in DAP.
Building such strategic partnerships is India's most effective way to safeguard against future price spikes, and supply disruptions. Long-term contracts with logistics flexibility, and alternate shipping routes can de-risk supply chains from future geopolitical flashpoints.
If these disruptions persist or worsen, how might this shape Rabi or Kharif seasons in 2025?
Disruptions in DAP imports from Jordan and Israel, among others, can delay wheat sowing in key Rabi-growing states like Punjab, Uttar Pradesh, and Bihar. If bottlenecks like the Red Sea or Strait of Hormuz continue, MOP shortages may affect Kharif crops like cotton, sugarcane, and pulses.
Farmers may respond by cutting back fertiliser use or shifting to lower-input crops, leading to imbalanced nutrient use and reduced productivity, especially in high-value crops. Rising global prices could push India's fertiliser subsidy bill beyond Rs 2.5 lakh crore, adding fiscal pressure. If these disruptions continue, the Rabi and Kharif seasons in 2025 can be shaped more by geopolitics than rainfall. For small farmers, the availability of fertiliser may well decide what, and how much they can grow. Possible farmer unrest could be there. Early action is essential to build resilience.
