India’s fertiliser sector has suffered a sharp production shock, with output falling significantly after disruptions to natural gas imports linked to the Middle East conflict. Official data shows output plunged by 24.6 per cent in March 2026 compared with the same month a year earlier, underscoring the vulnerability of fertiliser manufacturing to global energy supply chains.
The Ministry of Commerce and Industry said in a statement late Monday that the drop followed a period of steady growth, with production having risen by 3.4 per cent in February, 3.7 per cent in January and 4.1 per cent in December 2025. The reversal reflects a sudden tightening in fuel supply, as natural gas, a critical input for urea production, became constrained.
Natural gas is central to the production of urea, one of the most widely used fertilisers supporting India’s agriculture sector. As a result, any disruption to gas flows or price spikes in international markets directly affects output levels, costs and subsidy burdens. Reduced availability of gas can also divert supply priorities towards power generation, intensifying competition across the broader energy system.
The supply shock follows escalating geopolitical tensions after Iran moved to close the Strait of Hormuz in response to military action launched by the United States and Israel on 28 February. The strategic waterway is a key artery for global energy and commodity flows, with roughly a third of the world’s fertiliser-related supplies transiting the route. The disruption has raised alarm across markets over both energy security and agricultural input availability.
India’s Ministry of Petroleum and Natural Gas has said there are “adequate stocks of fertilisers available” and that sourcing is being diversified across multiple countries to mitigate risks. However, the reliance on imports remains significant, not only for urea but also for essential raw materials such as rock phosphate, phosphoric acid and potash, all of which are exposed to global supply chain disruptions.
The timing of the production decline is critical. Fertiliser demand in India peaks during the Kharif sowing season between June and July, ahead of the monsoon, and again during the Rabi season from October to November. Any sustained supply constraint could therefore translate into higher input costs or shortages during key agricultural cycles.
In response to rising prices and supply uncertainty, the government earlier in April increased fertiliser subsidies by 11 per cent in an effort to shield farmers from cost pressures. Such policy measures, while providing short-term relief, add to fiscal strain and highlight the broader economic impact of energy-linked disruptions.
The World Trade Organization has warned that supply shocks stemming from the Middle East conflict pose a dual threat to global food security, combining higher energy costs with constrained fertiliser availability. As markets remain sensitive to developments in key trade routes such as the Strait of Hormuz, further volatility in gas and fertiliser supply chains could have far-reaching consequences for both energy stability and agricultural output.
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