The intensifying conflict involving the United States, Israel and Iran has cast a long shadow over the Gulf region—one of the world’s most critical hubs for energy and fertiliser supply chains. What may appear as a distant geopolitical contest carries immediate economic implications, particularly for countries deeply integrated with the region’s energy and commodity flows. As tensions escalate and the security of vital shipping routes comes into question, concerns have grown over disruptions to supplies of natural gas, ammonia, sulphur and finished fertilisers that originate in or transit through the Gulf region, in particular the trade that passes through the Strait of Hormuz, a narrow maritime corridor that handles a significant share of global oil, LNG and fertiliser shipments. Any prolonged instability in this region can quickly reverberate across global commodity markets, tightening supplies and driving up input costs.
For India, these geopolitical disruptions strike at the core of its agricultural production system and food security. Fertilisers remain indispensable for sustaining crop productivity, and the country today ranks as the world’s second-largest fertiliser producer and consumer after China. In 2024–25, India consumed about 70.7 million metric tonnes (MMT) of fertiliser products, equivalent to roughly 33 MMT of nutrients (nitrogen (N), phosphorus (P) and potash (K) nutrients). Yet despite its sizeable domestic industry, India’s fertiliser economy remains deeply embedded in global supply chains. Import dependence remains significant—around 20 percent for urea, nearly 50 percent for di-ammonium phosphate (DAP), much of it sourced from the Gulf region, and almost 100 percent for muriate of potash (MOP), largely imported from Russia and Canada. Domestic production is itself reliant on imported feedstock: nearly 85 percent of the natural gas used in urea manufacturing is imported, while about 90–95 percent of phosphatic rock phosphate and half of the phosphoric acid are sourced from abroad. Once the import content of intermediate inputs is accounted for, India’s effective dependence on global fertiliser supply chains rises to nearly 68–70 percent, leaving the fertiliser sector, and by extension the country’s food security, highly exposed to geopolitical disruptions and supply shocks. Already India has invoked Essential Commodities Act (ECA) and brought gas allocation under government’s directives, giving highest priority to gas for household consumption and travel. The fertiliser industry has been assured only 70 percent of the last six months consumption.
Against this backdrop, strengthening fertiliser supply security must become a strategic policy priority. This policy brief argues that diversification of import sources and products is essential to reduce excessive dependence on a limited set of countries, particularly in geopolitically volatile regions. Complementary measures include encouraging overseas investments in fertiliser minerals and production assets, accelerating domestic exploration of fertiliser resources, and rationalising regulatory and pricing frameworks to improve efficiency in nutrient use. Policy reforms such as the direct transfer of fertiliser subsidies to farmers and gradual price deregulation of macro nutrients is critical to promote balanced fertiliser application while easing fiscal pressures. It will plug leakages too, which are substantial (about 20 percent). If this seems too bold a reform in the short run, an alternative would be to put quantitative restrictions on sales based on farm size, cropping patterns, and recommended nutrient doses issued by State Agricultural Universities (SAU). This can be done with the help of AgriStack that government has been building for quite some time. The third option would be to at least bring urea under the Nutrient Based Subsidy (NBS) scheme. So, in brief, either carry out full-fledged price reforms ensuring in advance DBT to farmers, or put quantitative restrictions in accordance with SAU recommendations, or bring urea also under NBS. Together, these measures can enhance the resilience of India’s fertiliser supply chains and safeguard the stability of its food production system in an increasingly uncertain geopolitical environment. As they say, never lose an opportunity to reform when a serious crisis hits. And the time for that is now.
