As the kharif agricultural season approaches (beginning by end of March 2026), the Parliamentary Standing Committee on Fertilizers, headed by Trinamool Congress MP Azad Kirti Jha, has tabled a report in Parliament warning of an acute shortage of essential fertilizers. The committee’s findings are particularly alarming because they coincide with the severe disruption of international shipping routes caused by the ongoing West Asia conflict and the effective closure of the Strait of Hormuz — through which a significant proportion of India’s fertilizer imports and raw material supplies transits.
India’s fertilizer supply chain exhibits multiple structural vulnerabilities: near-total import dependence for potash, severe dependence on imports for rock phosphate (domestic production meets only 10% of requirements), and limited domestic availability of sulphur. The ongoing geopolitical disruption has converted these structural vulnerabilities into an immediate crisis, with the kharif season — which includes crops like rice, maize, cotton, soybean, and pulses — just weeks away.
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For UPSC aspirants, this issue sits at the intersection of agricultural policy (GS-III), government schemes (fertilizer subsidy), food security (National Food Security Act), economic reforms (nutrient-based subsidy), and geopolitical risks to supply chains.
Table of Contents
Background and Context
Five Important Key Points
- India’s domestic urea production stood at approximately 306.67 lakh metric tonnes (LMT) in 2024-25, but imports of approximately 85 LMT were projected for 2026-27, with a combined subsidy outgo of ₹91,000 crore for indigenous urea and ₹31,999 crore for imported urea — illustrating the enormous fiscal cost of India’s fertilizer dependence.
- The import share of urea decreased from 28.5% in 2020-21 to 15.5% in 2024-25, reflecting expansion of domestic urea production capacity; however, production has stagnated at approximately 305–315 LMT against consumption of around 390–400 LMT, resulting in continued substantial import requirements.
- Potash is almost entirely imported, domestic production of rock phosphate meets only 10% of requirements, and sulphur has limited domestic availability — making Di Ammonium Phosphate (DAP) and NPK (Nitrogen-Phosphorus-Potassium) complex fertilizers particularly vulnerable to supply chain disruptions arising from geopolitical events.
- The parliamentary committee flagged the acute shortage of DAP during recent seasons, which necessitated an emergency special additional support package of ₹3,500 per metric tonne over and above the standard nutrient-based subsidy — illustrating that the structural vulnerability has already translated into periodic supply crises even in normal times.
- The natural gas allocation framework under the Essential Commodities Act orders has curtailed gas supplies to fertilizer manufacturers to 70% of their normal requirements, potentially reducing domestic urea production at exactly the moment when kharif demand is set to surge — creating a compounding crisis of simultaneous import disruption and domestic production curtailment.
Historical and Legislative Background
India’s fertilizer policy has evolved through several phases. The Green Revolution of the 1960s and 1970s was premised on heavy use of chemical fertilizers alongside high-yielding variety seeds and assured irrigation. The government has since maintained a significant fertilizer subsidy regime to ensure affordable access for farmers, particularly smallholders.
The urea subsidy is administered through a retention pricing scheme, while complex fertilizers (DAP, MOP, NPK) are covered under the Nutrient Based Subsidy (NBS) Policy, introduced in 2010. Under NBS, subsidies are fixed per kilogram of nutrient content (N, P, K, S), allowing manufacturers to price products at market rates above the subsidy. However, MOP (Muriate of Potash) and DAP prices have surged globally in recent years, and the NBS mechanism has periodically failed to maintain affordability.
Constitutional and Policy Framework
Agriculture is a State Subject under Entry 14 of the State List (Seventh Schedule), but fertilizers are a Union Subject under Entry 52 of the Union List (industries regulated by Parliament in public interest) and Entry 33 of the Concurrent List (production and distribution of essential commodities). This creates a shared governance space where the Centre controls fertilizer policy but States are responsible for agricultural extension and distribution.
The Fertiliser (Control) Order, 1985, regulates the quality, price, and distribution of fertilizers. The government operates a Direct Benefit Transfer (DBT) mechanism for fertilizer subsidies, linking Aadhaar-authenticated point-of-sale machines at retail outlets to track actual sales and disburse subsidies to manufacturers.
Government Policy and the Proposed Fertilizer Supply Security Fund
The Parliamentary Committee’s recommendation for a “Fertilizer Supply Security Fund” represents a structural policy innovation. Drawing analogy from strategic petroleum reserves, such a fund would finance the maintenance of buffer stocks of critical fertilizer inputs — particularly potash and DAP — sufficient to cover at least one full kharif season’s requirements, insulating the agricultural sector from geopolitical supply shocks.
The committee also called for a “proactive and forward-looking strategy” — a departure from the government’s reactive approach to fertilizer crises, which has typically involved emergency procurement, additional subsidy packages, and appeals to international suppliers when domestic supplies fall short.
Economic Implications
The fertilizer subsidy is one of India’s three largest subsidies (alongside food and petroleum subsidies), with a combined annual outgo exceeding ₹1.2 lakh crore. Any disruption in fertilizer supply during kharif season can reduce crop yields, affect farmer incomes, increase food inflation, and trigger rural distress — all of which have significant macroeconomic and political consequences. India’s food inflation, already elevated, could worsen significantly if kharif crop production falls due to fertilizer unavailability.
Way Forward
India must develop domestic mining and processing capacity for rock phosphate (significant deposits exist in Rajasthan), invest in potash exploration (limited deposits exist in Rajasthan’s Bikaner-Nagaur basin), and expand the use of bio-fertilizers and nano-fertilizers to reduce dependence on chemical inputs. The government should establish a Fertilizer Supply Security Fund with initial corpus of ₹10,000 crore, maintaining strategic stocks of DAP and MOP equivalent to three months of consumption. Long-term supply contracts with multiple geographically diverse suppliers should replace spot-market procurement. The NBS policy should be reformed to better absorb international price volatility.
Relevance for UPSC and SSC Examinations
UPSC Mains: GS-III (Economy and Agriculture) — Fertilizer policy, agricultural subsidies, food security, supply chain management, geopolitical risks; GS-II (Polity) — Parliamentary Committee system, Centre-State relations in agriculture.
SSC Topics: Indian Economy — Agriculture, government schemes, subsidies.
Key Terms: NBS Policy, Urea subsidy, DAP, MOP, NPK, Fertiliser Control Order 1985, Fertilizer Supply Security Fund, PMKISAN, Direct Benefit Transfer, Green Revolution, rock phosphate, potash import dependency.