Indian fertilizers’ Hormuz choke

Source: The post “Indian fertilizers’ Hormuz choke” has been created, based on “Indian fertilizers’ Hormuz choke” published in “Business Line” on  16th March 2026.

UPSC Syllabus: GS Paper-2- International Relations

Context: The Strait of Hormuz is a critical global maritime chokepoint that facilitates large volumes of energy and fertilizer feedstock trade. The ongoing Iran–Israel War and the disruption of shipping routes in the Gulf region have created significant risks for India, which depends heavily on imported fertilizers and energy-linked inputs for sustaining agricultural productivity.

Implications for India

1. High Import Dependence

1. India’s fertilizer sector is closely integrated with global markets because domestic production capacity is uneven across nutrients.
2. India imported fertilizers worth $7.2 billion, accounting for 2.9 per cent of global fertilizer imports, making it the seventh largest importer globally.
3. This high dependence on international markets exposes India to supply disruptions and price volatility during geopolitical crises.

2. Vulnerability in DAP Supply

1. India is the largest global importer of Diammonium Phosphate (DAP), accounting for 28.7 per cent of global imports.
2. Major suppliers such as Saudi Arabia (24 per cent) and Morocco (22 per cent) depend on maritime routes passing through the Strait of Hormuz and the Red Sea.
3. Any disruption in these routes can delay shipments, increase freight costs, and raise the landed price of fertilisers in India.

3. Risks in Urea Imports

1. India imported approximately $2.2 billion worth of urea, which meets around 20–25 per cent of domestic demand.
2. Key suppliers include Oman (15 per cent), Saudi Arabia (9.5 per cent) and Russia (18 per cent).
3. Since urea production depends heavily on natural gas for ammonia synthesis, disruptions in gas supply chains in the Gulf region can significantly increase production costs.
4. Global urea prices have already increased by around $80 per tonne, tightening supply and raising import costs.

4. Impact on Domestic Fertiliser Production

1. India operates more than 30 urea manufacturing plants, most of which depend on natural gas or naphtha feedstock.
2. A significant portion of India’s LNG imports originates from Gulf countries, making domestic fertiliser production indirectly vulnerable to geopolitical tensions.
3. Any disruption in LNG supply can increase production costs or reduce the operational capacity of fertiliser plants.

5. Structural Dependence on Potash

1. India has near total import dependence (95–100 per cent) for Muriate of Potash (MOP).
2. Major suppliers include Russia and Canada, which highlights the strategic importance of stable global supply chains.
3. Similarly, NPK complex fertilisers, which meet 35–45 per cent of domestic demand through imports, rely heavily on imported raw materials such as phosphoric acid and potash.

6. Logistics and Shipping Challenges

1. War-related disruptions have led to higher war-risk insurance premiums, vessel shortages, and rerouting of ships.
2. These logistics disruptions significantly increase freight costs and delay shipments.
3. Since fertilisers are bulk commodities, even a small increase in freight costs can substantially raise the landed cost of imports.

7. Fiscal and Inflationary Impact

1. India currently maintains fertilizer stocks sufficient for more than two months of national consumption, providing short-term relief against supply shortages.
2. However, the greater risk lies in rising international prices rather than immediate scarcity.
3. Higher prices can increase the government’s fertilizer subsidy burden, strain fiscal resources, and raise agricultural input costs.
4. These factors can ultimately lead to cost-push inflation in food prices.

Way Forward

1. Diversification of Import Sources

1. India should diversify fertilizer imports beyond the Gulf region by increasing procurement from countries such as Russia, Canada and South America.
2. Diversification will reduce excessive dependence on a single geopolitical corridor and enhance supply security.

2. Overseas Resource Acquisition

1. India should strengthen long-term fertilizer security by investing in phosphate rock and potash reserves abroad.
2. Strategic investments and joint ventures with resource-rich countries can help secure stable supplies.

3. Strengthening Domestic Production

1. India should expand gas-based urea plants, modernize fertilizer manufacturing infrastructure and improve energy efficiency.
2. Promotion of nano-fertilizers and balanced nutrient use can reduce dependence on imported DAP and potash.

4. Promoting Sustainable Agricultural Practices

1. Encouraging the cultivation of pulses such as moong and urad after the rabi harvest can reduce pulse imports while improving soil fertility.
2. These crops help enrich soil through natural nitrogen fixation, thereby lowering the need for chemical fertilizers.

5. Building Strategic Fertilizer Reserves

1. Maintaining larger fertilizer reserves can help stabilise domestic markets during global disruptions.
2. Strategic inventories ensure timely supply during critical agricultural seasons.

6. Strengthening Maritime Logistics

1. India should diversify shipping routes and improve coordination between fertilizer importers and shipping companies.
2. Strengthening Protection and Indemnity (P&I) insurance mechanisms can ensure uninterrupted fertilizer shipments during geopolitical tensions.

Conclusion: The crisis in the Strait of Hormuz highlights the structural vulnerabilities of India’s fertilizer supply chain due to heavy import dependence and energy-linked production systems. Strengthening diversification, domestic production capacity, overseas resource partnerships and logistics resilience will be essential to safeguard India’s agricultural productivity, fiscal stability and long-term food security.

Question: Geopolitical disruptions in the Strait of Hormuz expose structural vulnerabilities in India’s fertilizer supply chain.” Examine its implications for India’s agriculture and suggest measures to strengthen fertilizer security.

Source: Business line