Gulf Strikes Disrupt Fertiliser Supply Chains, Forcing India to Ration Gas Before Kharif Sowing

Across the farming belts of Punjab and Haryana, preparations for the crucial Kharif sowing season usually rely on an uninterrupted flow of domestic and imported crop nutrients. That flow is now under severe strain after military strikes on Qatari energy infrastructure and the blockade of the Strait of Hormuz disrupted global supply chains. These events have prompted the Union government to trigger emergency rationing of natural gas to insulate India’s fertiliser sector from a looming production shortfall.

India is the world’s second-largest user of fertilisers, consuming nearly 400 lakh tonnes of urea annually. The domestic industry relies heavily on imports for both raw materials and finished products. Urea accounts for 45% of fertiliser consumption in India, while complex fertilisers such as diammonium phosphate (DAP) and nitrogen, phosphorus and potassium (NPK) account for one-third, and single super phosphate (SSP) and muriate of potash (MOP) make up the remainder.

Over 50% of India's natural gas imports and approximately 80% of its ammonia requirements are sourced from West Asia, with shipments typically passing through the Strait of Hormuz. Data from Crisil Ratings indicates this reliance is deepening; West Asia accounted for 40% of overall urea and DAP imports in the first nine months of fiscal 2026, compared to 42% in fiscal 2025 and 28% in fiscal 2024.

The immediate crisis began when Iranian strikes on facilities at Mesaieed and Ras Laffan in Qatar halted the production of liquefied natural gas (LNG) and associated products. This directly led to the shutdown of the Qatar Fertiliser Company’s (QAFCO) Mesaieed plant, which has a capacity of 56 lakh tonnes per year, marking the first confirmed production impact in the region.

According to the London-based commodities research firm CRU Group, India relies on Qatar for 44% of its LNG imports. All 32 of India's ammonia-urea plants are gas-based, procuring feedstock either from domestic companies like ONGC or as imported re-gasified LNG through GAIL (India).

The squeeze on gas supplies has already forced operational adjustments across the sector. CRU Group indicates that domestic producers have begun feeling the effects, with IFFCO halting certain operations. Other manufacturers, including Chambal Fertilisers and Chemicals, Kribhco and Gujarat Narmada Valley Fertilisers & Chemicals Ltd. (GNFC), have reportedly adjusted operations, shut plants, or received force majeure notices.

The crisis extends beyond India’s borders, threatening the entire South Asian agricultural belt. In Pakistan, which relies entirely on Qatari LNG, four producers with a combined capacity of 16 lakh tonnes per year face immediate risk, with Sui Northern Gas Pipelines Limited declaring a potential force majeure. In Bangladesh, where 65% of gas is sourced from Qatar, four facilities have already shut down.

Industry analysts hold varying projections regarding the extent of the production loss. While CRU Group estimates that India’s monthly domestic production of 25 Lakh Metric Tonnes (LMT) could suffer losses of approximately 3 lakh tonnes, the pricing agency Argus Media projects a steeper decline of 8 lakh tonnes per month. CRU Group noted that the two-week point will be pivotal for operational continuity; if disruptions extend beyond 14 days, the main risk shifts to broader supply interruptions driven by constrained export routes and inadequate storage.

To mitigate the crisis, the Union government issued the Natural Gas (Supply Regulation) Order, 2026, classifying fertiliser plants under 'Priority Sector-2'. This mandate guarantees plants at least 70% of their average natural gas consumption based on the previous six months. Following this order, the Department of Fertilisers convened a high-level meeting with senior officials from the Ministry of Petroleum and Natural Gas and industry leaders, instructing all companies to make every possible effort to maintain continuous plant operations.

Additionally, the Department of Fertilisers concluded bidding through the Empowered Pool Management Committee (EPMC) to secure an additional 7.31 Million Metric Standard Cubic Meters per Day (MMSCMD) of gas on a spot basis.

According to a government press release, this intervention increased the total gas supply to urea plants by 23%, raising it from 32 MMSCMD to 39.31 MMSCMD. Consequently, domestic urea production climbed from 54,500 metric tonnes per day to 67,000 metric tonnes per day, lifting the plants' gas requirement fulfilment from 62% to 76%.

Diplomatic efforts are running concurrent to domestic rationing.

"Regarding our fertiliser situation at this point in time, especially for Kharif 2026, we have adequate stocks," Randhir Jaiswal, spokesperson for the Ministry of External Affairs, stated during an inter-ministerial press briefing. "We are comfortable. The Department of Fertilisers has also put out global tenders well in advance in anticipation of the current situation, and these have received very good responses."

Prime Minister Narendra Modi has also stated that the Union government has taken measures to ensure supplies are not affected and to protect farmers from the impact of global logistics bottlenecks.

Comparative stock status (as of March 2026)

The Department of Fertilisers reports a substantial buffer stock created through advance stocking during low-consumption phases.

Note: As of February 2026, the Union government imported 98 LMT of urea, with an additional 17 LMT scheduled for the next three months.

Despite the comfortable stock position, the financial toll of the global disruption will be substantial. International urea prices surged by 50% from USD 482.50 per tonne in late February to USD 720 per tonne by mid-March, while ammonia prices climbed 24% to USD600 per tonne.

Ratings agency Crisil cautions that the situation will strain both corporate profit margins and the public exchequer.

"The ongoing issues in the Middle East [West Asia] could disrupt the fertiliser supply chain at a crucial time for the kharif season," Anand Kulkarni, director at Crisil Ratings, stated. "Disruption in LNG and ammonia supplies continuing for about three months could cut domestic urea and complex fertiliser production by 10 to 15 per cent."

The Crisil report noted that the decrease in capacity utilisation will reduce energy efficiency for urea manufacturers, directly impacting their operating profits. Kulkarni explained that profitability primarily hinges on the difference between prescribed energy norms and actual consumption; highly efficient players operate at 5% below prescribed norms, an advantage that will be lost as capacity drops.

Furthermore, the rising cost of imported raw materials is projected to increase the government's subsidy bill by Rs 20,000 crore to Rs 25,000 crore. If domestic output is cut by 50% for one month across LNG-dependent plants, India's additional import requirement could rise by 10 Lakh tonnes.

However, Crisil noted that two factors will support the industry's credit profiles: the strong baseline liquidity of large fertiliser companies and the Union government's established track record of timely subsidy disbursements.

Replacing lost imports presents a secondary challenge. China, which ordinarily supplies a significant portion of India's nitrogen and phosphate shortfall, has halted its own urea exports to preserve domestic food security amid rising sulphur prices. The price of sulphur, essential for phosphate fertilisers, rose by 600 percent in the two years leading up to January 2026, prompting Beijing to halve its sulphuric acid export schedule.

Supply lines from West Asia remain constricted, leaving Australia, Brazil and Europe competing for alternative sources. The global scramble has triggered extraordinary regulatory measures; in the United States, a Jones Act waiver was announced to facilitate domestic deliveries, alongside sanctions waivers allowing imports from Venezuela. Meanwhile, European markets are watching to see if the European Commission will suspend its carbon border adjustment mechanism for fertilisers.

For the farmers in northern India, the stress of the global supply shock has not yet reached the local cooperatives. They will begin purchasing urea for the primary sowing window in May, relying on the Union government's emergency stockpiles to absorb the diplomatic fallout unfolding thousands of miles away.

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