In March 2026, as farmers prepared for the Kharif sowing season, three domestic urea manufacturing plants cut output. This followed United States and Israeli strikes on Iran on 28 February. The subsequent closure of the Strait of Hormuz, through which a significant share of global fertiliser and energy trade moves, disrupted input supply chains.. India entered its most critical agricultural season facing a projected shortfall of close to 2 million tonnes of urea.
This disruption reflects a recurring pattern in India’s fertiliser supply chain. Exposure to volatility is not incidental. It arises from how agricultural production is structurally linked to fossil-fuel-based inputs sourced from geopolitically concentrated regions..
The Self-Sufficiency Illusion
India is often described as largely self-sufficient in urea, producing approximately 87 percent domestically. This metric excludes upstream dependence on natural gas, which functions as both feedstock and energy source and accounts for 70 to 80 percent of production costs. A significant share of this gas is imported as liquefied natural gas.
Dependence is more pronounced in other nutrients. India imports all of its muriate of potash and a substantial share of its phosphate fertilisers, with sourcing concentrated in a few regions, including the Middle East. This structure ties domestic production to a limited set of external supply nodes, with the Strait of Hormuz playing a central role.
Two Wars, One Pattern
Russia’s invasion of Ukraine in 2022 revealed the extent of this structural exposure. Disruptions to fertiliser trade translated into sharp price increases and a significant expansion in subsidy requirements. India’s fertiliser subsidy bill exceeded Rs 2 lakh crore in 2022–23, roughly double initial budget estimates.
The policy response absorbed the shock fiscally, but left the underlying structure unchanged..
The 2026 Iran crisis reflects the same transmission mechanism under more concentrated conditions. The Strait of Hormuz channels a larger share of global nitrogen and energy flows, amplifying the impact of disruptions.
Together, these episodes show that supply shocks follow a consistent pathway shaped by concentrated inputs and external dependence.
Viable Alternatives at Scale
This dependence is not inevitable. It reflects the dominance of a particular production model rather than the absence of alternatives..
In Andhra Pradesh, the Community Managed Natural Farming (APCNF) initiative operates across more than 700,000 farms, with reported reductions in input costs of 30 to 50 percent over multi-year periods and stable or improved yields in many contexts.
Complementary evidence from integrated soil fertility management shows that combining organic inputs with reduced synthetic use can sustain productivity while improving soil health.
These practices demonstrate that lower dependence on imported fertilisers is feasible at scale, with adoption shaped primarily by institutional and policy support.
Policy Shifts That Cannot Wait
Addressing this structural exposure requires coordinated changes across sourcing, subsidy design, and domestic input systems. Fertiliser sourcing can be managed as a strategic risk through diversified procurement institutionalised via long-term contracts.
Subsidy design can align incentives with nutrient-use efficiency and soil health outcomes, reducing fiscal exposure while moderating input intensity.
Domestic alternatives can be scaled through integration into formal policy and financing frameworks, including support for bio-input supply chains anchored in farmer producer organisations and agricultural institutions.
At the global level, coordinated fertiliser reserves can reduce exposure to energy-linked supply disruptions.
From Shock Absorption to System Design
Food security and climate resilience depend on agricultural systems that derive stability from soil health rather than volatile input supply chains. Fertiliser dependency remains insufficiently integrated into policy as a structural design issue.
The farmer who plants in June remains exposed to disruptions that originate outside the agricultural system. Addressing this requires a transition from crisis management to structural redesign of input systems.