Gulf Crisis Lays Bare India's Fertilizer Import Vulnerability — and the Cost of Inaction
Urea prices more than doubled, DAP up 40%, and dozens of ships stranded at the Strait of Hormuz — the Gulf conflict has turned India's fertilizer import dependence into an acute fiscal and food-security emergency.
The short answer
The Gulf conflict that erupted on February 28, following US and Israeli strikes on Iran, has severely disrupted global fertilizer and gas supplies, sending urea and DAP prices soaring and stranding more than two dozen ships bound for India at the Strait of Hormuz. India imports nearly 10 million tonnes of urea and over half its annual DAP requirement, leaving farmers, the subsidy budget, and the current kharif season acutely exposed. Experts now warn that India's fertilizer and raw-material import bill could breach the record $33 billion set in 2022-23, and subsidies may surpass ₹3.5 lakh crore.
The Trigger
A Gulf Conflict That Agriculture Did Not See Coming
When Finance Minister Nirmala Sitharaman presented the Union Budget for FY 2026-27, fertilizer subsidy allocations were trimmed and an ICAR proposal to gradually reduce import dependence was left out of the plan. Within weeks, the calculus changed dramatically.
The Gulf conflict, which broke out on February 28 following US and Israeli strikes on Iran, triggered Iranian retaliatory action that drew in Qatar, the UAE, Oman, and Saudi Arabia — countries that together anchor a large share of global gas and fertilizer supply chains. The most consequential flashpoint has been the Strait of Hormuz, through which nearly 25 percent of global gas and fertilizer trade flows. More than two dozen vessels carrying fertilizers to India were left stranded there, and the disruption has shown little sign of swift resolution.
The Price Shock
Urea More Than Doubled; DAP Up 40 Percent as Gas Costs Climb
The commodity impact has been swift and severe across the fertilizer complex:
- Urea prices more than doubled from pre-conflict levels; India concluded urea contracts at prices as high as $959 per tonne.
- DAP prices rose by nearly 40 percent, with purchase contracts signed at up to $930 per tonne.
- Natural gas — the feedstock for urea — surged 55–60 percent, squeezing domestic production. Capacity utilisation at Indian urea plants fell to nearly 70 percent before partially recovering to around 1.8 million tonnes per month.
- Globally, production at approximately 49 fertilizer plants has been halted, compounding shortages of sulfuric acid, sulfur, phosphoric acid, and ammonia that feed DAP and NPK production.
India imports roughly 50 percent of its LNG, with Qatar as its single largest supplier, amplifying the gas-price shock across the domestic urea manufacturing chain.
The Structural Weakness
Half of Urea, More Than Half of DAP Sourced Abroad — and Domestic Output Also Import-Dependent
The crisis has put hard numbers on India's structural exposure. Of the roughly 40 million tonnes of urea consumed annually, close to 10 million tonnes are imported outright. For DAP, imports account for more than half of the approximately 10 million tonnes consumed each year.
The vulnerability runs deeper than finished-product imports. Even the 40–45 percent of DAP manufactured domestically relies heavily on imported rock phosphate, sulfuric acid, phosphoric acid, and ammonia — inputs that have now become scarcer and costlier. The pattern is similar across grades of complex NPK fertilizers.
In states such as Uttar Pradesh, farmers are already struggling to secure adequate urea and DAP. The concern is acute for the kharif season, and policymakers are simultaneously watching the rabi outlook, with elections scheduled in Uttar Pradesh and several other states in the period ahead — adding political urgency to what is already an economic and agronomic challenge.
The Policy Gap
Government Plugging Holes, But No Long-Term Strategy in Sight
The government has moved quickly to secure alternative supply, including imports at elevated prices, but long-term direction remains elusive, according to Rural World (sister organisation of Rural Voice).
Immediate measures underway:
- Emergency procurement at market prices ($959/tonne for urea; $930/tonne for DAP).
- A national framework linking subsidised fertilizer sales to Farmer IDs and crop-wise allocation, with pilot projects running in Haryana and Madhya Pradesh.
- The Agriculture Ministry's 'Khet Bachao Abhiyan' and deployment of agricultural scientists to promote balanced fertilizer use and soil health.
Proposals still under debate:
- Direct Benefit Transfer (DBT) of fertilizer subsidies to farmers — backed by economists and fertilizer companies alike.
- The ICAR roadmap for gradually replacing imports with domestic alternatives, which was left out of the FY 2026-27 Budget.
Prime Minister Narendra Modi has reiterated the push for natural farming and reduced chemical fertilizer dependence, but a comprehensive, costed long-term fertilizer policy has yet to materialise.
The Path Forward
30–40 Percent Import Reduction Is Achievable — With Serious Policy Commitment
India's crop yields continue to trail those of China, the United States, and several European countries, meaning chemical fertilizers will remain indispensable to production growth. The challenge, analysts argue, is not to abandon fertilizers but to use them more efficiently and source them more securely.
A possible below-normal monsoon linked to El Niño may ease fertilizer demand pressure during kharif — a silver lining for an otherwise stressed supply situation. But the structural remedy requires longer-horizon action.
Experts believe that through a combination of scientific research, domestic raw-material development, promotion of fertilizer alternatives, and a disciplined long-term policy framework, India could reduce fertilizer imports by 30–40 percent. The Gulf crisis, for all the disruption it has caused, has delivered an unmistakable signal: import dependence is a strategic liability, and the window to act is now.
Why it matters
For Indian farmers, the immediate risk is patchy urea and DAP availability during the critical kharif sowing window, with Uttar Pradesh already reporting supply stress. For policymakers, the fiscal arithmetic is alarming — subsidy costs threatening to exceed ₹3.5 lakh crore, without a clear long-term supply strategy in place. The crisis makes the case that reducing import dependence through domestic production, raw-material self-sufficiency, and balanced fertilizer use is not a distant aspiration but an urgent policy imperative. Analysts suggest that with focused research and policy intervention, fertilizer imports could be trimmed by 30–40 percent — a target India must now treat as a national security priority.
Frequently asked
- How much of India's urea and DAP consumption is met through imports?
- India consumes around 40 million tonnes of urea annually, of which nearly 10 million tonnes are imported. For DAP, more than half of the roughly 10 million tonnes consumed each year comes from imports. Even domestically produced DAP relies heavily on imported raw materials such as rock phosphate, sulfuric acid, and ammonia.
- What prices has India been paying for emergency fertilizer procurement during the Gulf crisis?
- According to Rural World, India concluded urea contracts at prices as high as $959 per tonne and DAP purchase contracts at up to $930 per tonne as it scrambled to secure supplies through alternative sources at elevated market prices.
- How large could India's fertilizer subsidy bill become as a result of this crisis?
- Some experts estimate that fertilizer subsidies could surpass ₹3.5 lakh crore. India's overall fertilizer and raw-material import bill could also exceed the record $33 billion reached in 2022-23, according to the source.
- What long-term steps are being proposed to reduce India's fertilizer import dependence?
- Analysts believe that through research, innovation, promotion of fertilizer alternatives, and a comprehensive long-term fertilizer policy, India could reduce fertilizer imports by 30–40 percent. Immediate reform proposals include Direct Benefit Transfer of subsidies to farmers and a national framework linking subsidised sales to Farmer IDs, with pilots already running in Haryana and Madhya Pradesh.
Source
This report summarises and analyses coverage from Rural Voice — Latest. The analysis and India context are IndianAgri's own.