Amid Iran war squeeze, unraveling the real cost of India’s fertiliser imports

The home manufacturing of these fertilisers entailed use of intermediate chemical substances or uncooked supplies, which had been imported.

Take urea, whose major feedstock is pure fuel. In 2025-26, India imported practically 26 mt of liquefied pure fuel (LNG) valued at $13.3 billion. Based on Petroleum Ministry information, the fertiliser sector had a 47.2% share in the nation’s consumption of regasified LNG final fiscal. The trade’s LNG imports alone would, then, have been price some $6.3 billion.

The home manufacture of DAP is equally primarily based on imported phosphoric acid and ammonia. Some corporations additionally manufacture phosphoric acid by reacting the uncooked materials – rock phosphate, which is imported – with sulphuric acid. Sulphuric acid is, in flip, both straight imported or manufactured domestically by importing the uncooked materials, i.e. sulphur.

For the manufacture of advanced fertilisers and SSP, too, the sources of N (ammonia), P (phosphoric acid/rock phosphate), Okay (MOP) and S (sulphuric acid/sulphur) are largely imported.

The quick level is that India imports greater than half of its pure fuel consumption requirement, whereas it has hardly any commercially mineable rock phosphate, potash or elemental sulphur reserves.

In 2025-26, India imported 2.2 mt of phosphoric acid (valued at $2.7 billion), 11.1 mt of rock phosphate ($1.9 billion), 2.5 mt of ammonia ($1.1 billion), 2.1 mt of sulphur ($776.4 million) and a couple of mt of sulphuric acid ($249.8 million). An estimated 90% of the ammonia and 80% of sulphur and sulphuric acid imports was used for the manufacture of fertilisers.

The accompanying desk exhibits that India’s whole fertiliser import invoice, inclusive of international trade outgo on each completed merchandise and inputs, was a whopping $27.2 billion in 2025-26, under solely the file $33.4 billion for 2022-23.

Desk.

Influence of wars

In 2022-23, India’s fertiliser imports surge was because of Russia’s invasion of Ukraine. Whereas it began on February 24, the real impression was in the fiscal yr from April 2022.

One can anticipate the precise results of the present United States-Israel versus Iran battle, which technically started on February 28, to be felt in 2026-27. The West Asia disaster and closure of the Strait of Hormuz have already pushed up world fertiliser costs.

India’s newest urea and DAP imports have been contracted at landed (cost plus freight) costs of $935-959 and $935 per tonne respectively, as towards their corresponding year-ago charges of $410-420 and $725 per tonne. Landed per-tonne costs now of MOP ($383), phosphoric acid ($1,360), ammonia ($840-850) and sulphur ($750-850) are, likewise, method greater than their final yr’s corresponding ranges of $283, $1,055, $400-420 and $295-305 presently.

On prime of the greater dollar-denominated import prices is the rupee’s depreciation. The dollar-rupee trade charge was 95.7 on Friday, versus a median of 85.2 in Might 2025.

The present landed costs of imported fertilisers are near the highs throughout December 2021-September 2022 in the run-up to and instantly after the Russia-Ukraine war. These went as much as $1,000-1,050 per tonne for urea, $950-1,000 for DAP, $590 for MOP, $1,715 for phosphoric acid, $1,575 for ammonia and $500-520 for sulphur.

If current traits maintain, with no significant breakthrough in the ongoing US-Iran negotiations, India’s whole all-inclusive fertiliser import invoice in 2026-27 may attain and even cross the $33.4 billion file of 2022-23. The considerably weaker rupee makes it worse: The cost of greater imports is in the end borne – whether or not by the exchequer, trade or farmers – in home foreign money.

Compounding the downside

Some state governments have not too long ago issued orders banning the producers and suppliers of subsidised fertilisers – urea, DAP, advanced fertilisers, MOP and SSP – from promoting any non-subsidised nutrient merchandise.

Uttar Pradesh was first to return out with such an order on January 13, adopted by Madhya Pradesh on Might 14 and Maharashtra on Might 20.

The directives have brought about disquiet in the trade. The larger gamers – the likes of Indian Farmers Fertiliser Cooperative, Coromandel Worldwide, Yara Fertilisers India, Chambal Fertilisers & Chemical compounds and Paradeep Phosphates Ltd – promote each subsidised fertilisers (whose retail costs, motion and inter and intra state allocations are topic to authorities controls) and non-subsidised merchandise (that are free from these rules).

Non-subsidised merchandise cowl water-soluble fertilisers (corresponding to sulphate of potash, mono ammonium phosphate and potassium nitrate, which might ship vitamins straight to the plant’s root zone through drip irrigation), micronutrients (bentonite sulphur, chelated zinc and manganese, zinc oxide and boron powder), nano and liquid specialty fertilisers (fitted to foliar utility or spraying straight onto leaves), bio-stimulants (like seaweed extracts and carbon enhancers) and bio-fertilisers (together with potash derived from molasses, liquid fermented or phosphate wealthy natural manures and microorganism consortia).

“These are premium fertilisers utilized in low doses for high-value crops corresponding to grapes, apple, banana, pomegranate, greens and sugarcane. They’re bought by way of the identical distribution and supplier channels as urea or DAP. Whereas the subsidised bulk fertilisers herald volumes, the non-subsidised speciality vitamins generate margins,” stated an trade supply.

The state governments have justified the ban on cross-selling, citing allegations of corporations resorting to “tagging” – forcing farmers to purchase non-subsidised fertilisers together with subsidised fertilisers. “This is able to principally open the doorways for fly-by-night operators pushing low-quality merchandise with none correct farmer coaching and schooling,” the supply famous.

The non-subsidised nutrient merchandise bought by fertiliser corporations are all authorised and notified below the Centre’s Fertiliser Management Order, 1985. “We now have a worldwide provide disaster in bulk fertilisers and Prime Minister Narendra Modi himself has referred to as for lowering their utilization. The states are doing the reverse, by telling us to not promote merchandise which have 80-90% nutrient use effectivity, versus the 30-35% in typical chemical fertilisers,” the supply added.