Iran war: The fertiliser challenge India faces, and the possible way out

The ongoing conflict in West Asia, centred on Iran, has severely disrupted global fertiliser supply chains, with the effective closure of the Strait of Hormu...

What Happened

The ongoing conflict in West Asia, centred on Iran, has severely disrupted global fertiliser supply chains, with the effective closure of the Strait of Hormuz blocking an estimated 20–30% of global fertiliser trade flows, including urea, ammonia, and sulphur.
Global urea benchmark prices rose approximately 26% in a matter of weeks — from around $465.5 per metric tonne to $585 per metric tonne — with Indian procurement tenders receiving offers as high as $1,000 per metric tonne, nearly double pre-crisis levels.
India's domestic gas supply for urea production has also been squeezed: LNG vessels can no longer safely transit Hormuz to reach Qatari terminals, and domestic allocations to urea plants have been cut to approximately 60% of contracted quantities.
The crisis has reinvigorated debate on structural reforms — including bringing urea under the Nutrient-Based Subsidy (NBS) regime, accelerating PM-PRANAM implementation, and scaling natural and nano-fertiliser alternatives.
With the Kharif season approaching alongside a forecast of below-normal monsoon in 2026, the double shock of fertiliser scarcity and reduced rainfall raises acute food security concerns.

Static Topic Bridges

India's Fertiliser Import Dependency

India is among the world's largest consumers and importers of fertilisers. While domestic urea production meets roughly 80–85% of consumption in normal years, 100% of Muriate of Potash (MOP/potash) and approximately 40–50% of Di-Ammonium Phosphate (DAP) are imported. Total urea consumption in 2024–25 was approximately 38.8 million metric tonnes against domestic production of around 30.7 million MT. In April–November 2025, urea imports surged over 120% year-on-year to 7.17 million tonnes.

MOP: 100% imported; Saudi Arabia accounts for approximately 42% of India's MOP imports
DAP: Major suppliers include Oman (~39.5%), Qatar (~14.7%), UAE (~10.7%), Saudi Arabia (~8%)
Urea: Gulf nations — Oman, Saudi Arabia, Qatar — collectively supply a large share of India's import requirements
LNG (feedstock for urea): Predominantly from Qatar's Ras Laffan terminal, routed through the Strait of Hormuz

Connection to this news: The Strait of Hormuz crisis has simultaneously raised global fertiliser prices, cut gas feedstock for domestic urea production, and disrupted imports of all three major nutrient categories — creating a triple shock to India's fertiliser system ahead of the Kharif season.

Nutrient-Based Subsidy (NBS) Scheme

The NBS scheme, introduced in April 2010 by the Department of Fertilisers under the Ministry of Chemicals and Fertilisers, provides a fixed annual per-kilogram subsidy linked to the nutrient content (Nitrogen, Phosphorus, Potassium, Sulphur) of Phosphatic and Potassic (P&K) fertilisers, rather than to a specific product. This allows market-determined MRPs for covered fertilisers while targeting the subsidy at actual nutrient delivery.

Urea is currently outside the NBS regime; it remains under a separate statutory price control with MRP fixed at ₹242 per 45-kg bag (exclusive of neem coating charges)
NBS rates for P&K fertilisers are revised annually/bi-annually based on international input prices
Bringing urea under NBS would mean subsidy savings when global prices fall and price signals to farmers — a long-debated reform
Total P&K fertiliser subsidy approved for Kharif 2025 was approximately ₹37,216 crore ($4.35 billion)

Connection to this news: With global urea prices more than doubling in tender offers, the gap between government-fixed MRP (₹242/bag) and actual procurement cost has widened enormously, raising the fiscal subsidy burden and highlighting the structural risk of urea price controls disconnected from global markets.

PM-PRANAM Scheme

The Prime Minister's Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth (PM-PRANAM) was launched on 28 June 2023. The scheme creates a financial incentive for states to reduce dependence on chemical fertilisers: states that reduce chemical fertiliser use below their three-year average baseline receive 50% of the resulting subsidy savings as a capital grant.

Operational period: FY 2023–24 to FY 2025–26
In 2023–24, chemical fertiliser consumption fell by 15.14 lakh tonnes under this scheme
Target: reduce the fertiliser subsidy bill by ₹20,000 crore over the scheme period
Monitoring platform: Integrated Fertilisers Management System (iFMS)
As of 2026, no funds have yet been disbursed to states despite reported savings, indicating an implementation gap in the disbursement mechanism

Connection to this news: The West Asia supply shock has added urgency to PM-PRANAM's objectives — reducing chemical fertiliser consumption not only saves fiscal resources but also insulates India from external supply disruptions. However, the lack of actual fund disbursement undercuts the scheme's incentive structure at a critical time.

Natural Farming and Nano-Urea as Alternatives

India has been exploring natural/zero-budget farming models and bio-input alternatives to reduce chemical fertiliser dependency. The Indian Council of Agricultural Research (ICAR) and IFFCO have developed nano-urea — a liquid urea formulation with nanoparticles — as a supplement that can reduce conventional urea consumption significantly.

IFFCO's nano-urea: 500 ml bottle claimed to partially substitute one bag (45 kg) of conventional urea; approved by the Fertiliser Control Order
Natural farming initiatives: National Mission on Natural Farming (NMNF) supports farmer transition with technical assistance and certification
Andhra Pradesh, Himachal Pradesh, and Uttarakhand have piloted large-scale natural farming programmes
Nano-urea faces criticism from some agronomists regarding sufficiency at scale for high-yield varieties

Connection to this news: With import prices surging and supply chains disrupted, the economic case for nano-urea adoption and natural farming transition has strengthened substantially, though transitioning at the scale required for food security cannot happen within a single season.

Key Facts & Data

Strait of Hormuz: 20–30% of global fertiliser trade (urea, ammonia, sulphur) transits this waterway
Global urea price increase: ~26% spike in weeks (from $465.5/MT to $585/MT); Indian tender offers reached ~$1,000/MT
India MOP imports: 100% imported; Saudi Arabia ~42% share
India DAP imports: ~40–50% imported; Gulf nations dominate supply
India urea consumption 2024–25: ~38.8 million MT; domestic production ~30.7 million MT; import gap ~8 million MT
Urea import surge 2025: April–November imports up 120% YoY to 7.17 million MT
NBS scheme launched: April 2010; covers P&K fertilisers (not urea)
Urea MRP: ₹242 per 45-kg bag (statutory price)
PM-PRANAM launched: 28 June 2023; targets ₹20,000 crore subsidy reduction
P&K subsidy budget (Kharif 2025): ₹37,216 crore
PM-PRANAM savings 2023–24: 15.14 lakh tonnes reduction in chemical fertiliser use