New Delhi, March 30 The escalating conflict in West Asia has led to a sharp 60 per cent surge in the prices of natural gas, a key feedstock for fertilizer plants, which is expected to increase the government's subsidy burden.
With the conflict disrupting energy supply lines, the supply of natural gas—a primary feedstock for producing ammonia, which is a key ingredient in nitrogen-based fertilizers—has been restricted to 80 per cent of the demand.
To meet this shortfall, fertilizer companies are purchasing liquefied natural gas (LNG) from the spot market.
At an inter-ministerial briefing on the West Asia developments, Aparna S Sharma, Joint Secretary in the Department of Fertilizers, said that the country has adequate stocks of fertilizers to meet the agricultural demand in the upcoming Kharif season.
"The current situation is a vulnerable one, which we have handled in a very strategic way," she said.
The Gulf region, which previously met 20-30 per cent of India's urea needs, 30 per cent of DAP (Diammonium Phosphate) and 50 per cent of LNG needs, remains affected, leading to a surge in input costs such as LNG, ammonia, and sulphur, along with higher freight expenses, she said.
Domestic urea production has also been affected, although steps have been taken to minimize the impact.
She said that the total fertilizer requirement for the Kharif season of 2026 is estimated at around 39 million tonnes, compared to 36.1 million tonnes last year. Current stock levels stand at about 18.0 million tonnes, higher than 14.7 million tonnes in the corresponding period last year, she added, noting that the months of April and May, which are typically lean agricultural months, are being used to build buffer stocks.
To support domestic production, gas supply to urea plants—initially cut to about 60 per cent—has been scaled up to 75-80 per cent through alternative arrangements, boosting output and reducing production losses, she said, adding that the shortfall is being met by purchasing LNG from the spot market.
Of the 52 million standard cubic meters per day of gas required by fertilizer plants, about 15 mmscmd is being procured from the spot market.
The spot purchases have been made at USD 19.5-19.6 per million British thermal unit, compared to USD 11-12 per mmBtu in the pre-crisis era, she said.
However, she insisted that the government continues to make fertilizers available to farmers at existing prices despite global volatility, and emphasized that there is no immediate shortage or cause for panic.
The higher feedstock cost will lead to a higher subsidy bill, but farmers will continue to receive urea at Rs 266 per 45 kg and Rs 1,350 for a 50 kg bag of DAP.
In March, urea production stood at around 1.8 lakh tonnes, while P&K fertilizer output was estimated at 0.9-1 million tonnes, she said, adding that this is lower than the 2.4 million tonnes monthly production last year.
Some fertilizer plants had taken annual maintenance shutdowns in March and are now starting production again, she said.
Of the existing stock of 18 million tonnes, 6.2 million tonnes is of urea, 2.33 million tonnes of DAP, and 5.6 million tonnes of P&K fertilizers, she said.
On the import front, the government has stepped up efforts to diversify sourcing and secure supplies. A global tender for 13.07 lakh tonnes of urea has been floated, while long-term arrangements have been made with countries such as Saudi Arabia and Oman.
"Proactive measures are being taken to diversify sourcing from other countries, including Russia, Morocco, Australia, Indonesia, Malaysia, Jordan, Canada, Algeria, and Egypt," she said.
A dedicated task group and a contingency "war room" have been set up to monitor availability, production, imports, and logistics in real-time. Coordination with states has been intensified to prevent hoarding, black marketing, and diversion under the Essential Commodities Act.