A possible end to the war is now in sight. As this article is being written, Brent has fallen back from its late-March peak above US$ 110 a barrel to the high US$ 80s amid reports of a deal to reopen Hormuz within days. The temptation in New Delhi will be to exhale, restore the status quo, and file the episode under “managed well.” That would be the costliest possible reading. The shock has handed India a diagnosis it could not otherwise have afforded.

The charter of this moment is not crisis management. It is conversion: turning a fertiliser emergency into the cropping and nutrient reset that successive governments have known was necessary and successive budgets have postponed.

The Anatomy Of A Squeeze

The numbers from the Food and Agricultural Organisation’s (FAO) own April assessment of the episode are sobering precisely because they are not speculative. The Hormuz disruption hit 40% of India’s crude imports, over half its urea imports, and around 90% of its Liquefied Petroleum Gas (LPG) imports. The Indian basket crude price surged past US$ 120 a barrel by April — the highest since the 2022 Ukraine spike.

The government’s first instinct was to absorb, not pass through. 

But absorption has a shelf life, and by the fourth month of the war, that shelf life expired. India did not, in the end, escape the cost of the conflict; it merely deferred it — and the deferral is now coming due at the retail counter. On 25 May, oil marketing companies raised petrol by ₹2.61 and diesel by ₹2.71 per litre; commercial LPG became dearer by ₹42 per cylinder; and in mid-June, the Centre lifted export duties on diesel and aviation fuel again to keep barrels at home. 

The dam, in other words, has begun to leak. The Reserve Bank of India read the signal early: at its June review, it cut India’s FY2026-27 growth forecast to 6.6% from 6.9%, raised its inflation projection to 5.1%, and held the repo rate at 5.25%, blaming elevated energy and commodity prices and the “continued supply disruptions arising from the conflict in West Asia”. 

Wholesale and retail price indices have both begun to rise. The cost India believed it had escaped is arriving a quarter late — and it is arriving as slower growth and stickier inflation, not merely as a larger subsidy bill.

A Monumental Crisis Unfolds 

Nowhere is that deferred cost larger or more structural than in fertiliser. When Petronet declared force majeure on its LNG imports on 3 March and gas to fertiliser plants was capped at 70%, domestic urea production fell by 800,000 tonnes in a single month — a 30% shortfall — because urea manufacturing is, in cost terms, 70% to 80 % natural gas. 

Import prices for urea nearly doubled. To keep the bag price frozen, the Union Cabinet approved a 10%–21% increase in nutrient-based subsidy rates for the kharif season — about ₹41,500 crore for non-urea fertilisers alone, some 12% more than a year earlier. 

But the kharif top-up was only the opening instalment. By May, with global prices still elevated, the Department of Fertilisers had gone back to North Block not for a marginal supplement but to double the FY2026-7 subsidy outright, seeking a 100% increase on the ₹1.71 lakh crore the Budget had provided. 

So, a war India did not fight, in a strait India does not control, threatens to double a single line of the Union Budget in a single year.

Self-Sufficiency That Wasn’t

The deeper embarrassment the crisis exposed is that India’s much-celebrated march to urea self-sufficiency is, on closer inspection, a shift in dependence rather than an escape from it. Six new gas-based urea plants commissioned over the past six years have pushed domestic production to record highs. India now makes about 87% of the urea it uses. But those plants run on natural gas, and roughly 85% of that gas is imported as LNG. Once the import content of feedstock and intermediates is counted, India’s effective dependence on global supply chains for its fertiliser economy is not 13% — it is closer to 68–70%.

We swapped the urea tanker for the LNG tanker and called it ‘atmanirbharta’.

The Distortion

Layered on top of this external fragility is a domestic distortion that is entirely self-inflicted and, frankly, harder to forgive because it predates any war. Because urea is held at an administered price far below cost, while phosphatic and potassic fertilisers are decontrolled and dearer, the Indian farmer — behaving with perfect rationality — pours on the cheap nitrogen and skimps on everything else. 

The national Nitrogen Phosphorous Potassium (NPK) application ratio has drifted to roughly 11:4.4:1 against an agronomic ideal closer to 4:2:1. On wheat, farmers apply about 20% more nitrogen than recommended and 83% less potash. The result is soil that is being slowly unbalanced and yields that punch below their weight: India’s fertiliser productivity in rice is around 16 kilograms of grain per kilogram of nutrient, the lowest among major producers, against Japan’s 33 on a far more balanced diet. 

We are simultaneously the world’s second-largest fertiliser consumer and one of its least efficient.

From Shock To Strategy: The Reset

The reform agenda that follows is not new to anyone who has read NITI Aayog’s diversification papers or the Indian Council For Research On International Economic Relations’ (ICRIER) work on Punjab and Haryana. What is new is the political licence the crisis creates. 

Four moves form the core of the charter:

The single most consequential structural reform is to bring urea under the Nutrient-Based Subsidy (NBS) framework — moving over years, with care, toward a per-nutrient subsidy that is broadly neutral across N, P, and K. Pair it with a serious push on nano-urea and nano-DAP (Diammonium Phosphate) which cut the physical tonnage that must be imported, shipped, and subsidised, and with the Soil Health Card used as an actual prescription rather than a printout. 

The objective is not to make fertiliser dearer; it is to stop paying farmers, in effect, to degrade their own land.

Second, attack the feedstock. If 70%–80% of urea’s cost is gas, then urea security is energy security. The honest long-term answer is green ammonia — ammonia synthesised from green hydrogen using India’s abundant and increasingly cheap renewable power. Solar Energy Corporation of India (SECI) has already begun procuring the order of 724,000 tonnes per year; this should be scaled with the same mission urgency that solar tariffs once received. 

Third, change what we grow, not only what we feed it. Government pricing and subsidy frameworks unintentionally reward the cultivation of water-guzzling, fertiliser-heavy crops in water-stressed regions.

Meanwhile, NITI Aayog warns that domestic pulses and oilseed demand will outstrip supply by mid-century, and the same Gulf crisis that froze our urea also exposed how much edible oil we import. The strategic logic is overwhelming: shift acreage from surplus, thirsty, import-intensive cereals toward pulses, oilseeds, millets and maize, which, in many cases, fix their own nitrogen and demand far less of the fertiliser we cannot reliably source.

Fourth, make the price signal point where the policy points. Diversification has failed for 40 years for one stubborn reason: assured procurement and remunerative MSPs rest on rice and wheat, while the crops we want farmers to grow are sold into thin, volatile markets. 

The Mission on Pulses, with its commitment to procure tur, urad, and masur at MSP toward self-sufficiency by 2027, is the right template — it must be extended credibly to oilseeds and millets, backed by real procurement, storage and a guarantee a farmer can plan a season around. 

A farmer will not abandon the certainty of the paddy mandi for a moral argument about aquifers. He will do it for the market. Building that market is the government’s job, and the savings from urea rationalisation can help fund it.