India’s fertilizer production plummeted to a five-year low in March 2026, driven by a severe shortage of natural gas and feedstock caused by the ongoing conflict in West Asia. The fertilizer production index fell to 95.7, the lowest point since April 2021.
1. The Production Crash (March 2026)
Data released by the Ministry of Commerce and Industry on April 20, 2026, reveals a significant contraction in the sector.
- Year-on-Year Decline: Fertilizer production fell by 24.6% compared to March 2025.
- Index Drop: The index dropped from over 120 in previous months to 95.7.
- Impact on Core Sector: The sharp fall in fertilizers was a major reason for the 0.4% contraction in India’s overall core sector index (which includes coal, crude oil, and electricity).
2. Primary Causes: The West Asia Conflict
India’s fertilizer industry is highly vulnerable to global energy shocks, particularly those affecting the Strait of Hormuz.
- Natural Gas Shortages: Natural gas accounts for roughly 90% of urea production costs. In early March 2026, Petronet LNG issued force majeure notices after suppliers in Qatar and Oman reduced shipments due to the conflict.
- Supply Diversion: To prevent domestic blackouts and ensure cooking gas (LPG) availability, the government initially curtailed gas supplies to industrial sectors, including fertilizer plants, reducing their allocation to as low as 60-65% of their requirement.
- Import Dependence: India imports approximately 27% of its total fertilizer consumption and nearly 60% of its phosphatic fertilizer (DAP) needs. Disruptions in shipping routes led to a “supply chain freeze” in March.
3. Government Mitigation: “Priority Sector” Shift
To safeguard the upcoming Kharif (monsoon) sowing season, the government has invoked emergency measures under the Natural Gas (Supply Regulation) Order, 2026.
| Action Taken | Impact on Supply |
| Reclassification | Fertilizer plants moved to ‘Priority Sector-2’ for gas allocation. |
| Gas Hike (Early March) | Supply increased from 60% to 80% via EPMC bidding. |
| Gas Hike (Late April) | Allocation further increased to 95% to restart stalled units. |
| Emergency Procurement | Procurement of an additional 7.31 MMSCMD of gas for the sector. |
4. Current Stock Levels & Inventory
Despite the production dip in March, the Department of Fertilizers has assured farmers that India is “well-insulated” from immediate shortages due to heavy stockpiling earlier in the year.
- Urea Reserves: Approximately 6.15 million metric tonnes (LMT), up from 5.09 LMT last year.
- DAP/NPK Stocks: Combined stocks are significantly higher than 2025 levels, providing a “vital operational cushion” for the start of the June cropping cycle.
- Buffer Strategy: The government has lined up 1.7 million tonnes of finished fertilizer imports to be delivered between April and June 2026 to bridge the domestic output gap.
