Global fertiliser prices and freight have increased due to the West Asia crisis, which has hit domestic urea output, a senior official said on Monday.
“Global prices and freight costs have increased, while the domestic production of urea has been impacted,” Aparna S Sharma, additional secretary, Department of Fertilisers, said in a briefing.
Fertiliser imports from the Gulf region account for the country’s consumption of 20%-30% of urea, 30% of diammonium phosphate (DAP), and 50% of liquefied natural gas (LNG), a key feedstock in urea production.
LNG imports from Qatar and the United Arab Emirates (UAE) are shipped through the Strait of Hormuz, which has been blocked because of the conflict.
To boost supplies, the government has stepped up sourcing across geographies. “We are diversifying our sourcing bases and procuring supplies from Russia, Morocco, Australia, Algeria, Egypt, Indonesia, Malaysia, Canada, etc.,” Sharma said.
“However, through spot buying of LNG, the urea production, which dipped to 60% of the capacities, has reached close to 80% of the capacities,” Sharma noted, adding that some urea units, which went for annual shutdown, have started operations after the commencement of gas supplies.
“Urea production has commenced in 27 plants that are getting LNG, and other plants (3) are in start-up mode,” Sharma said.
Officials on shock levels
Despite the slowdown in urea production to 1.8 million tonnes (MT) in March against the monthly average output of 2.4 MT, the official said that stock levels are comfortable.
“As of today, we have adequate stock positions of fertiliser, and urea and (DAP) are made available to farmers at regulated prices,” she said.
Current fertiliser stocks stand at about 18 MT — 6.19 MT (urea), 2.33 MT (DAP), 5.66 MT (NPKs), 2.52 MT (SSP), and muriate of potash (1.27 MT) — compared to 14.7 MT a year ago.
The fertiliser demand for the forthcoming kharif season, 2026, is projected by the agriculture ministry at 39 MT, while actual sales of soil nutrients in kharif 2025 were 36.1 MT.
On September 17, to boost LNG supplies, the government approved the purchase of LNG from spot markets in countries such as Australia, Russia, and the United States. The ministry will be conducting spot buying of LNG every fortnight.
Currently, around 10% to 15% of LNG is purchased from the spot market, while the rest is sourced under long-term contracts with Qatar and the UAE.
About 80% of urea production in the country uses LNG, while the rest uses domestic gas. At present, 30 out of 32 urea units use natural gas as feedstock.
Officials have stated that the government’s fertiliser subsidy outgo may see a substantial increase in FY27 if the West Asia conflict prolongs and elevated global prices of soil nutrients persist.
Fertiliser subsidy
As per the Budget estimate for FY27, the fertiliser subsidy is estimated at Rs 1.7 lakh crore.
The last time a global conflict impacted the subsidy outgo was in FY23, when fertiliser subsidy reached a record Rs 2.54 lakh crore as shipping of supplies through the Red Sea was disrupted due to the Ukraine-Russia conflict.
While India imports about 85% of LNG under long-term contracts from countries such as Qatar and the UAE, movements in spot prices would reflect the cost of imports in the next fiscal.