Fertiliser Crisis: How India Prevented Supply Disruptions During the West Asia War

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• Despite the US-Israel-Iran war and the effective closure of the Strait of Hormuz since February 28, 2026 — triggering arguably the greatest global energy supply shock in history — India has avoided major fertiliser shortages in the ongoing kharif season. 
• However, while urea supply remains comfortable, the situation is more precarious for DAP (di-ammonium phosphate) and complex fertilisers.

Initial Shock: Urea Production Dip

• India’s urea production fell to 17.5 lakh tonnes (lt) in March 2026, down from 24.7 lt in March 2025.
• Cause: Disruption in liquefied natural gas (LNG) supply — the primary feedstock for urea. 
• Before the war, 53-54% of India’s LNG imports came from Qatar and the UAE via long-term contracts, which couldn’t be honoured due to shipping blockades and damage to liquefaction infrastructure from Iranian missile/drone strikes.

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Recovery Through Government Action

• Diversifying LNG Sources
  • Domestic urea output recovered sharply: 21 lt (April) → 25.2 lt (May) → 25.4 lt (June).
  • Cumulative April-June 2026 production at 71.5 lt was 5.4% higher than 67.9 lt in the same period last year.
  • The government pushed GAIL and Indian Oil Corporation to diversify LNG sourcing — pivoting to spot market purchases from the US, Oman, Nigeria, Angola, Congo, Indonesia, Trinidad, and Norway as Qatar/UAE’s share fell to near-zero.
• Proactive Urea Imports
  • Indian Potash Ltd (IPL) and National Fertilizers Ltd floated tenders, securing 25 lt and 17 lt of imported urea at $935-959 and $444.9-449.3 per tonne respectively.
  • A third tender for 17 lt (10 lt to western ports, 7 lt to eastern ports) was issued by Rashtriya Chemicals and Fertilizers.
  • Total urea imports during April-June 2026 reached 25.1 lt, sharply up from just 8.4 lt in April-June 2025.
  • The government has also absorbed higher import costs rather than passing them to farmers, impacting the fertiliser subsidy bill.

The DAP and Complex Fertiliser Problem

• Unlike urea, DAP, complex fertilisers, and SSP have seen both lower domestic output and lower imports.

Rising Raw Material Costs

• Phosphoric acid import prices rose steadily: from $1,055/tonne (Jan-Mar 2025) to $1,700/tonne (Jul-Sep 2026).
• Sulphur prices are even worse — elevated to $500-550/tonne (against a normal $150-250 range) even before the Iran war, due to Ukrainian drone attacks on Russian oil refineries and an export ban by a major supplier. 
  • West Asia conflict has further tightened supplies from QatarEnergy, Saudi Aramco, ADNOC, and Iran, pushing prices to around $1,100/tonne.
• Ammonia (source of nitrogen for complex fertilisers) prices eased to $650-700/tonne after peaking at $850-900 in May, as supplies from Qatar, Saudi Arabia’s Maaden/SABIC, and Iran were squeezed.
• Core issue: Sulphur is essential for making sulphuric acid, which breaks down rock phosphate into phosphoric acid — without both, DAP, SSP, and complex fertiliser production is constrained.
• No fresh DAP imports have been contracted since IPL’s April 28 tender secured 13.5 lt at $930-935/tonne — notably higher than $725-750/tonne a year earlier. 
• Experts warn prices are unlikely to fall and may rise further.

The El Niño Factor: Demand-Side Relief

• Beyond supply management, subdued fertiliser demand has also helped avert shortages, driven by El Niño-induced monsoon rainfall deficiency.
• All-India rainfall during June-July was 12.6% below normal, and kharif sowing area was 4.7% lower than last year.
• This contrasts with 2024 and 2025 (surplus monsoon years), when ample soil moisture drove farmers to plant aggressively and queue for fertilisers, causing supply-demand mismatches and long queues.
• This year, a slowdown in fertiliser offtake, combined with better government preparedness, has meant no significant shortages despite the war.

Conclusion

• India’s proactive diversification of LNG and urea import sources helped avert a nitrogen fertiliser crisis despite an unprecedented West Asia-driven energy shock. 
• However, persistent sulphur and phosphoric acid shortages continue to threaten DAP and complex fertiliser supply, underscoring the need for sustained government intervention — particularly with the politically sensitive rabi season and upcoming state elections ahead.

Source: IE