Fertiliser prices may rise amid rising tensions between Israel and Iran

New Delhi|Pune: Fertiliser prices may surge, leading to a fresh increase in India’s subsidy bill, if supplies through the Strait of Hormuz are impacted, said people aware of the matter.

“If the Strait of Hormuz is closed, fertiliser movement will be restricted, pushing prices up,” the top executive of a large fertiliser company said on condition of anonymity, adding that around 10 vessels carrying different types of fertilisers crossed the strait on Sunday, moving towards India, a day after the US and Israel launched military strikes on Iran.

Volatility in availability due to production disruption in Iran can also affect production during the upcoming kharif season, India’s longest agricultural period, which starts in June with the onset of monsoon.


“Any volatility in global fertiliser prices and supply can directly affect the next kharif season, which is crucial for India’s food security and keeping food inflation in control. Iran is the third largest producer of urea and an important supplier of ammonia,” said another senior industry executive.

While there is still time for the kharif season to commence, planning for imports, which includes fixing prices and signing deals, takes place in February-March, said another executive.

West Asia, including countries such as Saudi Arabia, Qatar, Oman and United Arab Emirates, is home to key suppliers of urea, sulphur and ammonia. Iran is the third largest producer of ammonia, a key input for soil nutrient.

India needs to import an estimated two million tonnes of various fertilisers every month to meet its requirements. The country is heavily dependent on imports for fertilisers, with close to 100% reliance on imported muriate of potash and up to 60% in the case of di-ammonium phosphate (DAP).

Fertilisers constitute a politically and strategically important sector, where the government spent Rs 1.9 lakh crore in subsidies in 2024-25. The subsidy is expected to cross budget estimates in this fiscal too.

“We anticipate urea costs rising by 30-40% as Middle Eastern supply chains tighten, straining both farmer margins and the national subsidy budget,” said Deepak Pareek, agricultural expert and consultant.

Despite record domestic production of urea, India imported 8 million tonnes of the commodity during April-December 2025, or 85% more year-on-year, according to the Fertilizer Association of India. It also imported 5 million tonnes of DAP during the first nine months of the fiscal, up 46% year-on-year.