Localised fertilizer shortages have been a recurring feature of India’s agricultural seasons in recent years. This year, the Government took proactive steps by contracting for imports in February, resulting in stocks of 62 lakh tonnes of urea, 25 lakh tonnes of Di-Ammonium Phosphate (DAP) and 56 lakh tonnes of complex fertilizers being available by mid-March. Urea inventories are currently 20 per cent higher than in the same period last year, DAP stocks are double last year’s levels and complex fertilizers 80 per cent higher.
While this will help farmers tide over the initial months of kharif sowing, the Iran conflict can lead to shortages re-emerging later. There appear to be no quick fixes here. Even if India manages to secure safe passage for India-bound ships via the Strait of Hormuz, severely disrupted global supply chains for LNG (Liquified Natural Gas), sulphur, phosphoric acid and ammonia could take time to normalise. This can have a lasting impact on prices of fertilizers, forcing the Centre to incur a larger subsidy bill than budgeted.
The past decade has seen India make concerted efforts to achieve self-sufficiency in fertilizers. Under the New Investment Policy initiated in 2013, six new urea units were commissioned through designated PSUs, adding 7.6 million tonnes per annum of additional capacity by 2025. Urea output thus hit 30.7 million tonnes by FY25 with import dependence reduced to 15 per cent. However, LNG supplies to produce ammonia are the industry’s Achilles Heel, with 50-60 per cent of gas needs still met through imports. The Iran conflict is likely to lead to idling of recently built urea capacity, despite the Centre’s diktat to oil companies to meet 70 per cent of the fertilizer industry’s gas needs. On DAP, the situation is more fraught. With 50-60 per cent import dependence, hardly any new capacity has come up in the last decade due to unviable pricing. Indian fertilizer majors had inked an agreement with Saudi Arabia’s Maaden in July 2025 for 3.1 million tonnes of annual DAP supply over a five-year period, but it is not clear if supplies can arrive now.
As India’s fertilizer shortages stem from a lack of natural resources, there aren’t many long-term solutions. Attempts can be made to de-risk the LNG supply chain through geographical diversification. While India has effectively diversified its crude oil imports across 40 countries, its LNG imports rely heavily on West Asia with Qatar making up 50 per cent of imports by volume, the UAE contributing 15 per cent and Oman about 5 per cent. Diversifying supply origins to Australia, Russia and African nations, apart from the US, could help. Building strategic reserves for LNG, as is being done for crude oil will surely help. With coal in plentiful supply, the coal gasification route for urea production can also be explored. More than all this though, realistic pricing of fertilizers aligned to production costs are very much the need of day, as only this can spur balanced use of nutrients.
Published on March 19, 2026