What Happened
- Experts and industry analysts have warned that the ongoing US-Israel-Iran military conflict — and the resulting disruption to the Strait of Hormuz — threatens to create a global "fertiliser shock" with serious consequences for Indian agriculture.
- The primary mechanism is sulphur supply disruption: sulphur, a critical input for phosphatic fertilisers (particularly Diammonium Phosphate/DAP and Single Super Phosphate/SSP), is largely a byproduct of oil and gas processing in Gulf countries, and its supply has been severely constrained by the conflict.
- Approximately 47% of global sulphur exports and 44% of global urea exports are at risk due to Strait of Hormuz disruptions, according to estimates cited by agricultural economists.
- India, the world's second-largest fertiliser consumer, imports roughly 20-25% of its fertilisers from Arabian Gulf countries, with nearly all of those shipments transiting the Strait of Hormuz.
- The timing is acute: March marks the Rabi harvest season, and Kharif sowing (June-July) will require fertiliser procurement beginning in April-May — leaving a narrow window for alternative sourcing before the critical agricultural cycle.
Static Topic Bridges
India's Fertiliser Policy: Subsidies, Import Dependence, and Vulnerability
India's fertiliser sector is characterised by high government subsidy, significant import dependence for key nutrients, and a policy framework that has created structural distortions. Urea — the most widely used nitrogen fertiliser — is sold to farmers at a controlled price of ₹242 per 45 kg bag (unchanged since March 2018), far below market cost, with the government paying the difference as subsidy directly to manufacturers and importers.
- India's total fertiliser subsidy bill has ranged between ₹1.5 lakh crore and ₹2.5 lakh crore in recent years, making it one of the largest single line items in the Union Budget.
- The Nutrient Based Subsidy (NBS) Scheme, launched in 2010 by the Department of Fertilizers, provides fixed subsidies to Phosphatic and Potassic (P&K) fertilisers based on nutrient content — but urea is excluded from NBS and continues under a separate price-controlled regime.
- India's import dependence: approximately 25% for urea, around 90% for phosphates (primarily DAP), and 100% for potash (MOP — Muriate of Potash).
- Fertiliser imports in FY2026 were on track for a record $18 billion, with urea imports up approximately 61% to 9 million MT and DAP imports up approximately 52% to 7 million MT.
Connection to this news: The combination of near-total import dependence for phosphates and potash, and significant dependence for urea, makes India structurally exposed to any disruption in Gulf supply chains — the Iran conflict directly activates this vulnerability.
The Strait of Hormuz: Global Energy and Agricultural Chokepoint
The Strait of Hormuz is the world's most critical maritime oil and gas chokepoint. Located between Iran to the north and Oman and the UAE to the south, the strait is approximately 33 km wide at its narrowest navigable point. It handles approximately 20% of global oil consumption and 20% of global LNG trade in transit daily.
- Flows through the Strait of Hormuz in 2024-2025 amounted to approximately 20.9 million barrels per day (mb/d) of oil and petroleum products.
- Approximately 84% of crude oil moving through the strait is destined for Asian markets; India is the second-largest destination at 14.7% of flows, after China (37.7%).
- Beyond oil: the strait is the primary route for sulphur exports from Saudi Arabia, UAE, Qatar, and Kuwait — countries that produce sulphur as a byproduct of gas processing and oil refining.
- Sulphur is an essential input for sulphuric acid, which in turn is used to manufacture phosphatic fertilisers (single super phosphate, triple super phosphate, DAP) and to process phosphate rock into usable fertiliser forms.
- Closure or severe disruption of the strait — even temporarily — causes cascading shortages across global fertiliser supply chains within weeks.
Connection to this news: India's fertiliser imports from the Gulf (urea, sulphur, ammonia, DAP) almost entirely transit the Strait of Hormuz, meaning the conflict's direct physical impact on shipping creates the supply squeeze that experts are warning about.
Food Security and Agricultural Input Policy in India
India's food security architecture rests on the National Food Security Act (NFSA), 2013, which guarantees subsidised grain to approximately 813 million persons (about 67% of the population). The assured supply of fertilisers at affordable prices is a prerequisite for the agricultural productivity that supports NFSA obligations. Any significant rise in fertiliser costs either increases the government's subsidy burden or gets passed on to farmers, threatening output and rural income.
- India's agricultural sector employs approximately 42-47% of the total workforce (directly or indirectly) and contributes approximately 18-19% of GDP (including allied activities).
- Kharif crops (paddy, maize, cotton, oilseeds, pulses) are sown in June-July and harvested in October-November; these depend heavily on urea and DAP applied at sowing and tillering stages.
- Rabi crops (wheat, mustard, gram) are sown in October-November and harvested in March-April; the current window is the Rabi harvest period.
- A 10% rise in DAP prices (currently approximately ₹1,350 per 50 kg bag at government-fixed rates) would add tens of thousands of crores to the fertiliser subsidy bill or, if passed on, directly raise farmers' input costs.
- India's buffer stock norms for fertilisers (particularly urea) require the government to maintain strategic reserves, but these are typically designed for domestic demand management, not sustained import disruptions.
Connection to this news: A prolonged Strait of Hormuz disruption timed with the Kharif sowing preparation period could simultaneously stress the government's fiscal position (through subsidy escalation), threaten on-farm availability, and potentially reduce crop yields — creating a food security risk that translates downstream into inflation and rural distress.
Key Facts & Data
- Global sulphur exports at risk from Strait of Hormuz disruptions: approximately 47%.
- Global urea exports at risk: approximately 44%.
- Global ammonia exports at risk: approximately 27%.
- Global phosphate fertiliser exports at risk: approximately 25%.
- India's import dependence: ~25% urea, ~90% phosphates (DAP), 100% potash.
- India's fertiliser imports in FY2026: on track for record $18 billion.
- Urea imports FY2026: up ~61% to approximately 9 million MT.
- DAP imports FY2026: up ~52% to approximately 7 million MT.
- Strait of Hormuz daily throughput: approximately 20.9 million barrels/day of oil.
- India's share of Strait of Hormuz oil flows: approximately 14.7% (second largest after China).
- Urea retail price to farmers (controlled): ₹242 per 45 kg bag (unchanged since March 2018).
- National Food Security Act (NFSA) enacted: 2013; covers approximately 813 million persons.
- India's agricultural workforce share: approximately 42-47%.
- Strait of Hormuz width at narrowest navigable point: approximately 33 km.
- Nutrient Based Subsidy (NBS) Scheme launched: 2010.