India’s Dependence on West Asia for Urea

The West Asia conflict has disrupted LNG and fertiliser supply chains, threatening India’s urea production ahead of the Kharif season.
India depends on West Asia for both LNG (to produce urea domestically) and direct urea imports (71%) sourced from the region.

What is Urea?

Urea is a nitrogen-rich chemical compound with the formula CO(NH₂)₂, widely used as a fertilizer.
It contains 46% nitrogen, making it the most concentrated and commonly used nitrogenous fertiliser.
Urea is produced from ammonia and carbon dioxide via the Haber-Bosch & urea synthesis process.
Natural gas (LNG) is the main input as it provides hydrogen for ammonia production.
India has shifted from naphtha/fuel oil-based plants to gas-based plants for efficiency & lower emissions.

India’s Dual Dependence Problem

LNG Imports: India imports over 50% of its LNG, exposing urea production to global supply shocks.
Fertiliser Imports: Domestic production is insufficient, so India imports large quantities of urea, DAP, and potash.
Over 60% of LNG imports pass through the Strait of Hormuz, making supply vulnerable to conflict.

Economic & Agricultural Impact of LNG and Urea Disruptions

Urea Production: LNG supply disruptions lead to lower output from fertiliser plants, affecting domestic availability.
Price Rise: Dependence on imports causes fertiliser shortages and higher prices, especially during the Kharif season.
Higher Subsidy: Increased global prices raise the government’s fertiliser subsidy expenditure.
Food Security: Limited fertiliser use may reduce crop yields, impacting farmer income and overall food security.

Government Response & Policy Measures

Fertiliser sector has been included under the priority category via the Natural Gas (Supply Regulation) Order, 2026.
Assured Supply: Ensured ≥70% of average natural gas supply to fertiliser units to sustain production.
Buffer Stock: Increased fertiliser reserves to ~177 LMT, including urea (~59–61 LMT) & DAP (~25 LMT).
Subsidy Support: Continued fertiliser subsidies to cushion farmers from rising global prices.

Initiatives in India’s Fertiliser Sector

Neem-Coated Urea: Neem coating of urea to reduce diversion, improve efficiency, and soil health.
Nutrient-Based Subsidy: NBS Scheme Subsidy offered based on nutrient content (N, P, K, S) to encourage balanced fertiliser use (excluding urea).
New Urea Policy (2015): Focus on maximising domestic production, energy efficiency, and reducing import dependence.
DBT in Fertilisers: Subsidy transferred to companies based on actual sales to farmers via Point-of-Sale devices, ensuring transparency.
Nano Urea: Developed by IFFCO to reduce urea consumption and improve efficiency.
Soil Health Card: Provides farmers with soil nutrient status & recommendations for balanced usage.
One Nation One Fertiliser: PMBJP – Bharat Brand standardised branding (“Bharat Urea, Bharat DAP”) to ensure uniform pricing and availability.

Context (TH)

Frequently Asked Questions

What is urea fertiliser?
Urea is a nitrogen-rich chemical compound (CO(NH₂)₂) widely used as a fertiliser.

Why is urea the most used fertiliser in India?
Urea contains 46% nitrogen, making it the most concentrated and commonly used nitrogenous fertiliser.

Why has India shifted to gas-based urea plants?
India shifted to gas-based plants for higher efficiency and lower emissions compared to naphtha-based plants.

Why is the Strait of Hormuz important for India’s LNG supply?
Over 60% of India’s LNG imports pass through the Strait of Hormuz, making it a critical chokepoint.