CRISIL report warns that escalating tensions in West Asia have spotlighted India’s deep reliance on imported fertilisers and raw materials, putting farm productivity, input costs and national food security at serious risk.
India’s fertiliser sector, the backbone of the country’s agricultural economy, is facing heightened uncertainty as the ongoing conflict in West Asia disrupts global supply chains. A detailed assessment by rating agency CRISIL has underscored how the geopolitical turmoil is exposing structural weaknesses that could threaten crop yields, inflate input costs and ultimately endanger food security for India’s vast population.
With agriculture still employing nearly half of the country’s workforce and contributing significantly to GDP, any disruption in fertiliser availability or affordability carries far-reaching consequences. The CRISIL report paints a concerning picture: India depends on West Asia for 40-42 per cent of its total fertiliser imports, a reliance that becomes even more pronounced for key nutrients.
Heavy Reliance on West Asian Supplies
The dependence is particularly acute for urea, the most widely used fertiliser in India. Nearly 64.8 per cent of urea imports originate from West Asia, while the region also supplies over one-third of diammonium phosphate (DAP) imports. Beyond finished products, the conflict is affecting the flow of critical raw materials such as liquefied natural gas (LNG), ammonia, sulphuric acid and rock phosphate – all essential for domestic manufacturing.
India’s fertiliser value chain remains heavily import-dependent, with around 69 per cent of its total value derived from foreign sources. Imported feedstock alone accounts for 44.5 per cent of the value used in production. For urea, which dominates the market, natural gas constitutes nearly 80 per cent of raw material costs, making the sector extremely sensitive to energy price shocks and supply disruptions.
Pressure on Domestic Production and Input Costs
Fertilisers consume 31 per cent of India’s total LNG usage, positioning the sector as one of the largest gas consumers in the economy. As global LNG prices surge amid the West Asia conflict, production costs are climbing rapidly. Even though the government has stepped in by prioritising gas allocation to fertiliser plants – raising it to 95 per cent of previous consumption levels – the report cautions that prolonged disruptions could still lead to output shortfalls.
Current fertiliser stocks stand at levels sufficient for only about 2.5 months of consumption. While supplies are being directed towards the ongoing kharif season, any extended conflict could hinder fresh procurement and create shortages ahead of the rabi planting cycle. The dual impact of higher prices and potential scarcity is likely to force farmers to either pay more or cut back on application, both scenarios detrimental to productivity.
Rising fertiliser costs are also expected to swell India’s import bill, widen the current account deficit and place additional strain on government finances through higher subsidy outlays. These pressures could feed into broader inflationary trends, affecting not just rural households but the entire economy.
Impact on Farm Productivity and Food Security
The agriculture sector now confronts a double challenge: escalating input costs on one hand and the risk of actual supply shortages on the other. Lower fertiliser availability directly undermines crop yields, while elevated prices may discourage optimal usage, leading to nutrient deficiencies in the soil. Urea alone accounts for about 45 per cent of total fertiliser consumption in India, a pattern that has already contributed to nutrient imbalance and over-dependence on a single product.
Experts warn that sustained disruptions could have cascading effects on rural incomes, food price stability and overall agricultural growth. Given India’s large population and its heavy reliance on domestic food production, fertiliser security has become virtually synonymous with food security. Any shortfall in output risks higher food inflation and reduced availability of staples, particularly during critical cropping seasons.
The CRISIL analysis highlights that the current crisis is not merely a short-term supply glitch but a symptom of deeper vulnerabilities built into the system over years of import dependence and limited domestic diversification.
Long-Term Reforms Needed for Self-Reliance
To mitigate these risks, the report calls for urgent structural reforms. Key recommendations include diversifying import sources away from West Asia, securing long-term supply agreements for raw materials and accelerating the expansion of domestic production capacity.
There is also a strong emphasis on exploring alternative technologies. Several fertiliser companies have already signed long-term contracts for green ammonia, aligning with the National Green Hydrogen Mission. Shifting towards such environmentally friendly options could gradually reduce dependence on imported natural gas and fossil fuel-based feedstocks.
Additionally, tapping into domestic reserves of phosphate and potash, along with promoting balanced fertiliser use that moves beyond urea dominance, are seen as essential steps. These measures would not only bolster resilience against future geopolitical shocks but also support sustainable agricultural practices in the long run.
As the West Asia situation continues to evolve, the fertiliser crisis serves as a stark reminder of the interconnected nature of global geopolitics and India’s domestic food systems. Without swift action on diversification and capacity building, the country’s agricultural growth and the livelihoods of millions of farmers could face prolonged uncertainty.
Policymakers, industry stakeholders and farmers alike are now watching closely to see how the government balances immediate supply management with the larger goal of achieving genuine self-reliance in fertilisers. The coming months will be critical in determining whether India can turn this vulnerability into an opportunity for building a more robust and secure agricultural foundation.
