The Supply Chain Disruption
India’s domestic fertiliser production experienced a sharp 24.6 percent decline in March 2026 compared to the previous year, as the ongoing conflict in the Middle East severely hampered the import of natural gas. This supply chain disruption, triggered by the blockade of the Strait of Hormuz following the escalation of the conflict on February 28, has forced the nation to scramble for essential raw materials like urea, DAP, ammonia, and sulphur. As a country where agriculture sustains over 45 percent of the workforce, this production slump presents a significant risk to the upcoming Kharif sowing season.
Context of the Energy-Agriculture Nexus
The vulnerability of India’s fertiliser sector stems from its heavy reliance on imported natural gas, which serves as a primary feedstock for urea production. Because a significant portion of global fertiliser-related inputs transits through the Strait of Hormuz, the effective closure of this maritime chokepoint has created a bottleneck for energy and chemical supplies. While the government has historically managed to maintain steady output, the current geopolitical climate has disrupted these established trade routes, forcing a re-evaluation of national energy priorities.
Government Response and Inventory Management
In response to the mounting pressure, the Ministry of Petroleum and the Ministry of Fertilisers have taken emergency measures to stabilize the sector. The government has designated fertiliser manufacturing as a priority sector, ensuring that at least 70 percent of gas supplies are allocated to production units. Minister of State for Fertilisers, Anupriya Patel, reported that through the Empowered Pool Management Committee (EPMC) bidding process, gas availability for the sector was boosted to 80 percent of average consumption levels by late March. Despite these logistical efforts, the Ministry maintains that existing stocks of urea and DAP are sufficient to meet immediate demands.
Economic Implications for Farmers
The agricultural sector is currently bracing for a volatile Kharif season, compounded by unseasonal rainfall and rising input costs. To mitigate the financial burden on farmers, the government recently increased fertiliser subsidies by 11 percent and raised the Minimum Support Price (MSP) for paddy to Rs 2,441 per quintal. These policy adjustments are designed to encourage crop diversification and protect farmers from global price shocks, yet the uncertainty surrounding fertilizer availability remains a primary concern for rural economic stability.
Industry Outlook and Future Risks
The World Trade Organization has warned that the ongoing conflict poses a double threat to global food security by destabilizing both energy costs and agricultural yields. As India moves into the critical June-to-July sowing window, the primary focus will be on the efficacy of diversified sourcing strategies and the ability of the government to maintain supply lines despite regional instability. Observers should monitor whether the current subsidy levels will be sufficient to offset potential price spikes if the blockade of the Strait of Hormuz persists through the summer months.
