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The Department of Agriculture and Family Welfare has reduced its fertiliser requirement for the Kharif season this year due to the expected impact of El Nino on the monsoon. Additional Secretary Aparna Sharma of the Department of Fertilisers announced that the urea requirement has been cut from 194.04 lakh metric tonnes (LMT) to 190.32 LMT, while the requirement for diammonium phosphate (DAP) has been reduced from 59.17 LMT to 56.23 LMT. This decision follows the Indian Meteorological Department's (IMD) forecast of lower monsoon rains due to El Nino conditions. The announcement was made at a bi-weekly inter-ministerial briefing on developments in West Asia. Since the conflict in West Asia began, India has added 132.43 LMT of fertilisers (including Urea, DAP, NPKs, SSP, and MOP) to its stock through imports and domestic production. India has also secured 25 LMT of urea, 15 LMT of DAP, and 10 LMT of NPKs from outside the Strait of Hormuz, which are expected to arrive in Indian ports in June-July. Additionally, India has issued a new global tender to procure 17 LMT of urea.
India's fertiliser policy has evolved over decades, balancing the need for food security (Green Revolution) with fiscal sustainability. The Fertiliser Control Order (FCO), 1985, under the Essential Commodities Act, 1955, regulates the quality, pricing, and distribution of fertilisers. The New Pricing Scheme (NPS) for urea was introduced in 2003 to rationalise subsidies, but urea remains heavily controlled, with MRPs set by the government. The Nutrient-Based Subsidy (NBS) regime, introduced in 2010 for P&K fertilisers (like DAP), provides a fixed subsidy per nutrient, allowing MRPs to fluctuate with global prices.
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India is the world's second-largest consumer of fertilisers, but it imports a significant portion of its requirements. Domestic production of urea is around 24.5 million tonnes annually, against a consumption of about 35 million tonnes. Similarly, India imports 50-60% of its DAP and 70-80% of its MOP. The geopolitical events, such as the Ukraine-Russia conflict and now the West Asia conflict, have exposed supply chain vulnerabilities, as Russia, Belarus, and the Middle East are major suppliers of potash, urea, and DAP.
The government's response to such crises has included diplomatic engagement, securing alternative supply sources, and maintaining strategic stocks. The recent decision to lower fertiliser requirements based on IMD's monsoon forecast marks a shift towards integrated climate-agriculture risk management. Historically, El Nino years have led to erratic monsoons, impacting kharif sowing and fertiliser demand. For instance, the El Nino of 2014-15 reduced kharif acreage and fertiliser use. The government's proactive adjustment of fertiliser demand based on near-real-time weather forecasts is a relatively new and adaptive policy approach.
Political & Constitutional Dimensions The government’s decision to cut fertiliser demand shows proactive administrative coordination between the Departments of Agriculture and Fertilisers, and the IMD. The consultation with states reflects cooperative federalism, as agriculture is a State subject (Entry 14, List II), while price control and subsidies fall under the Union's domain (Entry 33, List III). However, critics argue that such last-minute demand changes can disrupt supply chains and that the government should have better buffer stocks, especially given the West Asia crisis. The opposition may point to the high global prices of urea ($935-959 a tonne in recent import tenders) and question the efficacy of the NBS regime and direct benefit transfer (DBT) for fertilisers in insulating farmers from price volatility.
Economic & Financial Impact The reduction in demand implies a potential saving in fertiliser subsidy, which in the 2025-26 Union Budget was estimated at ₹1,64,000 crore (urea) and ₹22,000 crore (P&K). If the lower offtake materialises, the government could save 3.72 LMT of urea and 2.94 LMT of DAP subsidy. However, the cost of imports remains high due to the West Asia conflict and global demand-supply imbalances. The additional stocks (132.43 LMT) and new tender (17 LMT urea) will strain foreign exchange reserves and could increase the subsidy bill if domestic MRPs are not raised. Spot urea prices at $935-959/tonne are significantly higher than the subsidised MRP, exposing the exchequer to large subsidy carry-forward costs. The secured route via the Strait of Hormuz ensures supply but at a higher logistics cost.
Social Dimensions Fertilisers are critical for small and marginal farmers who constitute 86% of India’s operational landholdings. Any shortage or price increase of DAP and urea can affect Kharif sowing, especially for paddy, pulses, and oilseeds, threatening food security and farm incomes. On the positive side, the IMD's early warning of a poor monsoon allows farmers to shift to less water-intensive crops (e.g., millets, pulses), aligning with the government's push for natural farming and crop diversification. However, such a shift requires robust extension services and access to quality seeds, which are often lacking in rain-fed areas. The equity dimension is sharp: farmers in rain-fed regions (e.g., Marathwada, Bundelkhand) will be more affected by both the monsoon failure and any fertiliser unavailability.
Governance & Administrative Aspects The quick reassessment of fertiliser demand demonstrates institutional capacity to respond to climate data. However, it also reveals vulnerability: the requirement was originally set at 194 LMT, and the cut of only ~4 LMT (2%) seems modest relative to a potential 10-15% monsoon deficit, suggesting the assessment may not be aggressive enough for a full-blown drought. The integration of IMD forecasts into supply chain management is a good example of climate-smart governance. Challenges remain in ensuring that the 'secured' stocks from outside the Strait of Hormuz actually reach states on time. The inter-ministerial briefing mechanism is a strong coordination tool but relies on data-sharing between departments, which can be a bottleneck.
International Perspective India’s dependence on fertiliser imports (especially potash from Canada, Israel, and Jordan; urea and DAP from the Middle East) makes it vulnerable to geopolitical shocks. The West Asia conflict (affecting Strait of Hormuz chokepoint) and the Ukraine-Russia war have disrupted supply chains. India's strategic procurement from non-Chokepoint sources and the issuance of global tenders are moves towards trade diversification. The high global urea prices also reflect the energy crisis (natural gas is a key feedstock). For international relations, India's ability to secure fertiliser supplies from West Asia (Saudi Arabia, Oman, UAE) despite conflict shows diplomatic leverage. However, high global prices could hurt India's trade deficit, which is already under pressure.
Short-term measures: The government must accelerate the arrival of the 50 LMT of fertilisers secured from outside the Strait of Hormuz (urea, DAP, NPKs) before the peak sowing season of June-July. The inter-ministerial coordination should extend to the Ministry of Railways and state governments for last-mile distribution. A high-level committee should monitor the IMD monsoon forecast in real-time and adjust state-wise fertiliser allocations dynamically. The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and other cash transfers can be used to compensate farmers for any price hike due to short-term supply constraints.
Medium-term reforms: The government should expand the Nutrient-Based Subsidy (NBS) regime to include urea, moving away from product-specific subsidies to encourage balanced fertilisation. The direct benefit transfer (DBT) for fertilisers should be strengthened by linking Aadhaar-based verification to prevent leakage. The Neem Coating of Urea scheme should be strictly enforced to prevent diversion. Domestic production should be ramped up: the revival of closed urea plants (e.g., Gorakhpur, Barauni, Talcher) as announced under the New Urea Policy (NUP) 2015 should be expedited. The use of nano urea and nano DAP should be promoted to reduce bulk transport and subsidy burden.
Long-term vision: India must reduce import dependence, especially for potash (100% imported). This requires R&D into alternative local sources (e.g., seaweed, compost) and strategic investments in mining units in friendly nations (e.g., Israel, Jordan, Canada for potash). The integration of crop diversification, climate-resilient agriculture (millets, pulses), and soil health management (Soil Health Card scheme) into the fertiliser demand estimation process will ensure that demand forecasts are more holistic. Finally, establishing a strategic fertiliser reserve (like the Strategic Petroleum Reserve) of 3-6 months' import cover, managed by a dedicated agency, would buffer against future geopolitical or climatic shocks.