Fertiliser shield widens amid Gulf shock
The push reflects both urgency and caution. Government officials have said fertiliser stocks stand at about 18 million tonnes, up from 14.7 million tonnes a year earlier, against expected demand of roughly 39 million tonnes for the coming season. That gives policymakers some room, but not enough to ignore the exposure created by conflict near the Strait of Hormuz and tighter supply from traditional exporters. India has already been seeking larger volumes from Russia, Belarus and Morocco, while also sounding out other producers as insurance against further disruption.
At the heart of the concern is the structure of India’s import dependence. Reuters reported in March that more than 40 per cent of the country’s urea and phosphatic fertiliser needs are tied to the Middle East. Disruption there has a double effect: it threatens cargo availability and also raises the cost of natural gas, a crucial feedstock for nitrogen fertilisers. Domestic production has also come under pressure. Output of urea was reported at about 1.8 million tonnes a month during plant maintenance, below the more usual 2.4 million tonnes, adding to the need for timely imports even as officials insist there is no immediate shortage.
Price risk is now as important as volume risk. Fertiliser prices had already been climbing before the latest procurement outreach, with Reuters reporting that benchmark prices for some products rose to more than $600 a tonne from about $425. Wider market reporting has shown the same direction of travel. ICIS described March conditions as a period of heightened volatility across nitrogen, phosphate and sulphur markets as conflict in the Middle East hit trade flows and sentiment. Reuters and other industry reporting have also pointed to sharp jumps in urea and ammonia prices as shipping through Hormuz became more uncertain.
For the government, the political and economic challenge is to prevent that international surge from reaching farms at full force. Urea continues to be sold at a notified price of ₹242 for a 45-kg bag, while the Department of Fertilizers said in March that the retail price of DAP had been maintained at ₹1,350 for a 50-kg bag for the rabi season through subsidy support. That pricing shield helps farmers, but it also increases the fiscal burden when import costs rise. Industry material published in February said the state still bears about 90 per cent of the cost of urea, underlining how exposed the subsidy bill becomes when global markets tighten.
India has not relied on a single response. Apart from direct talks with overseas suppliers, firms have secured long-term volumes from Russia, including 2.8 million tonnes under reported arrangements, while a global tender for 1.3 million tonnes of urea was issued to reinforce reserves. Officials have also taken steps to support domestic output by prioritising gas allocation to fertiliser plants. The strategy suggests New Delhi is trying to build overlapping buffers rather than betting on a quick stabilisation in Gulf shipping.
The market backdrop gives that strategy added weight. Industry executives and analysts have warned that a prolonged conflict could squeeze farmers globally, alter crop choices and feed through into food inflation. Yara, one of the world’s largest fertiliser companies, has said farmers are being squeezed by the jump in input costs, while broader reporting has shown developing economies to be especially vulnerable because they are more dependent on imported fertilisers and have less room to absorb price shocks. For India, where fertiliser availability is tied directly to crop yields, rural incomes and food-price management, the issue is not only one of trade logistics but of macroeconomic stability.
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