The government is stretching every sinew to ensure adequate supplies of urea during the kharif season, mainly through cooperative manufacturing units such as IFFCO and Kribhco, besides public sector NFL. | Photo Credit: NAGARA GOPAL

With the Iran war appearing to prolong amid Tehran’s retaliation, India’s fertilizer industry is worried whether the country would have ample urea supplies in the ensuing kharif season, which accounts for 60 per cent of annual agricultural output. One clear signal that emerges is that the country may have to pay a higher price for its fertilizers this year, particularly urea, pushing up production costs and potentially increasing the government’s subsidy burden.

The government is stretching every sinew to ensure adequate supplies of urea during the kharif season, mainly through cooperative manufacturing units such as IFFCO and Kribhco, besides public sector NFL.

“The gas supply situation is volatile now and urea production will depend on it,” said a former senior official of Fertiliser Association of India. He said that as the government has directed fertilizer companies to use all the produced ammonia only for urea production and this would help generate some additional output of the crop nutrient.

Supplies rise

Sources said that co-operative major IFFCO continues to run three of its five urea plants at full capacity now as the gas received (at 65 per cent) for all the five plants is currently used by the three operational plants. Two plants are closed for annual maintenance.

Similarly, another co-operative Kribhco has also been operating the Hazira-based unit at lower capacity since the gas supplied is yet to reach 65 per cent. Its Hazira unit, India’s second largest urea producer at a single location, had produced 2.34 mt of urea in 2023-24, exceeding its capacity of over 2.1 mt.

Public sector National Fertilizers (NFL), which is operating four out of 5 plants, is utilising 65 per cent capacity, the sources said. The urea plant at Nangal in Punjab is now under annual maintenance while other four plants are likely to be closed either later this month or in April, the sources said.

Gas supplies to major fertilizer companies have increased to 65 per cent of the demand now, though. .

. However, some companies are not yet getting the 65 per cent supply, though it has improved in the past one week. Urea manufacturers are worried, though they hope for an early end to the war and normalisation of gas supply to ensure adequate domestic production in the kharif season.

Other sources

A New Delhi-based analyst said India could make up with gas supplies from Russia, the US, Brazil and Guyana. “Supplies may not be a problem, but the price will be. We may have to pay more,” he said.

Research agency BMI, a unit of Fitch Solutions, said India could increase natural gas imports from Russia to bridge the supply gap for fertilizer companies.

In the 2025 kharif season, the urea demand was estimated at 18.54 million tonnes (mt), but sales rose by 4 per cent to 19.32 mt. The fertilizer demand for kharif 2026 is yet to be estimated.

Data shared by the government show that the urea stock position was 6.15 mt as of March 10. If India matches last year’s kharif season (April-September) production level of 14.48 mt, it can ensure enough availability.

Allocation hiked

“Since April is lean season for urea plants as kharif sowing commences with arrival of monsoon in the main land around June 1, with the current lower supply the production can be managed after some factories advanced their maintenance to March. The domestic urea production in 2025 March was 2.48 mt and in April 2.19 mt,” said AK Singh, an agriculture scientist.

BMI said India’s fertilizer window is at risk. “India’s corn sowing begins in May, and the hardy cereal is the country’s most fertilizer-dependent crop,” said BMI. If the war extends beyond a month, it could affect the utilisation of fertilizer, which could affect yield.

The analyst said the government would have to incur more towards fertilizer subsidy in the 2026-27 fiscal.

Urea subsidy for the 2026-27 fiscal has been pegged at ₹1,16,805 crore, 7.6 per cent lower than ₹1,26,475 crore in FY26. Within this, the subsidy for imported urea has been hiked by over 52 per cent. As the global urea price before the war was below $500/tonne and India spends significant amount towards subsidy, the current flare up in prices will put pressure on the government to allocate more funds.

The government subsidy on imported urea was estimated at ₹2,100/bag (of 45 kg) and that for domestically produced urea was ₹1,397/bag (during Q3FY25) since the crop nutrient is sold to farmers at ₹267/bag.

Meanwhile, the global price of urea is reported to have touched $700/tonne as quoted by some sellers, though no deal has happened yet. But India’s domestic urea production will still be cheaper at $450-500/tonne considering the rates at which Liquefied Natural Gas (LNG) was earlier purchased. However, as the Indian LNG spot price has exceeded $20/mmBtu, India’s domestic urea cost is set to rise, too, potentially inflating the government’s subsidy bill.

The US natural gas price marginally eased on Tuesday to $3.02/mmBtu, but it is still higher from $2.80 on February 27.

Published on March 17, 2026