Imports to self-reliance: Hormuz crisis revives India’s fertiliser dependence debate

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Ziraat Times Team Report

The escalating conflict involving Iran, the United States and Israel has raised fresh concerns over India’s fertiliser supply chain, with analysts warning that disruptions in the Strait of Hormuz could expose vulnerabilities in the country’s agricultural inputs.

A significant share of fertiliser shipments destined for India from Gulf producers—including the United Arab Emirates, Qatar, Saudi Arabia, and Oman—transit through the strait, one of the world’s most strategically important maritime chokepoints.

Analysts estimate that India faces a 20–25 per cent exposure to fertiliser supply chain disruptions if shipping through the waterway remains constrained or becomes more expensive due to war-related risks.

Import dependence remains high

India’s reliance on Gulf producers is particularly pronounced in key fertiliser categories.

Estimates suggest that about 63 per cent of India’s nitrogen fertiliser imports, including urea and ammonia, originate from Gulf countries. Around 32 per cent of imports of di-ammonium phosphate (DAP) also come from the same region, a report in NDTV said.

Saudi Arabia alone accounts for roughly 42 per cent of India’s potash imports, underlining the importance of the Gulf supply corridor.

Notably, Iran’s direct contribution to India’s fertiliser imports remains minimal. In 2024, India purchased urea worth about $231 million from the UAE, Saudi Arabia, and Qatar, compared with just $2.59 million worth from Iran.

The vulnerability therefore lies not in trade with Iran itself but in the shipping route through the Strait of Hormuz that Gulf exports rely on.

Rising fertiliser demand

India’s fertiliser demand has been steadily increasing, driven by its large agricultural sector and the country’s two-crop cycle, consisting of the Kharif and Rabi seasons.

Imports are projected to reach a record $18 billion in FY26, with urea accounting for about 61 per cent of the total due to its government-controlled pricing system.

With sowing for the Kharif season beginning around June–July, any disruption in fertiliser availability or spikes in prices—driven by higher shipping and insurance costs during the conflict—could place pressure on farmers and potentially affect food security.

Diversification options limited

Experts say diversification of supply sources will be critical if the Hormuz crisis persists, though alternatives remain limited.

One possibility is increased sourcing from Russia and China, both of which can ship fertilisers via routes that bypass the Strait of Hormuz. However, India had previously attempted to reduce dependence on Chinese fertiliser supplies, making this option politically and strategically sensitive.

Other suppliers such as Nigeria, Uzbekistan, and Indonesia currently account for less than five per cent each of India’s urea imports and therefore offer only limited short-term relief.

A pivot back to Ukraine is also theoretically possible, though imports from that country had already fallen to negligible levels even before the Russian invasion of Ukraine.

Domestic production faces energy challenge

Increasing domestic fertiliser production is widely viewed as the most reliable long-term strategy.

India has set a self-sufficiency target of about 38 million tonnes of urea production, with earlier plans aimed at significantly reducing imports by 2025.

However, domestic manufacturing depends heavily on natural gas, a key feedstock for urea production. Ironically, India’s major gas suppliers—Qatar, the UAE, and Oman—are themselves Gulf states affected by the regional conflict.

According to industry sources cited by Reuters, Petronet LNG recently informed state-owned marketing companies that gas supplies could be cut by as much as 30 per cent.

Government reassurances

Despite these concerns, the government maintains that current fertiliser availability remains stable.

The Department of Fertilisers stated on March 6 that stocks of urea and other fertilisers were “robust and secure”, and that supplies would not be significantly affected even if imports from parts of the Middle East declined.

Market analysts cited by S&P Global suggest the government may be prepared to pay higher prices or freight premiums to secure fertiliser shipments rather than risk shortages that could anger farmers ahead of national elections scheduled for April–May.

A manageable but real risk

While India is unlikely to face an immediate fertiliser crisis, the Hormuz disruption highlights structural vulnerabilities in the country’s agricultural supply chains.

For now, emergency purchases, diversified imports, and government subsidies may cushion the impact. But the situation underscores the importance of long-term domestic production and diversified energy supplies to shield India’s food system from geopolitical shocks.

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