How the Middle East conflict is reshaping Indian agriculture
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· 9 min read
The escalating conflict in the Middle East, particularly tensions involving Iran and instability around the Strait of Hormuz, has moved beyond a regional geopolitical issue to become a major disruption for global energy and food systems [1]. For India, whose agricultural sector depends heavily on imported fertilisers and energy resources, the consequences are both immediate and far-reaching. Rising input costs, supply-chain disruptions, inflationary pressures, and fiscal stress are already affecting the sector, with risks likely to deepen if the crisis continues [2].
A major concern is India's dependence on fertiliser imports from the Gulf region, especially nitrogen-based fertilisers that rely on natural gas as a key feedstock. The Strait of Hormuz, now vulnerable to heightened geopolitical tensions and maritime risks, serves as a vital route for India's imports of urea, ammonia, and liquefied natural gas (LNG) [3]. Disruptions in shipping and increased security concerns have tightened global supply while driving up freight and procurement costs.
India is the world's second-largest consumer of fertilisers after China, and third largest producer globally [4]. The country also relies heavily on imports of phosphatic fertilisers and remains almost entirely dependent on external sources for potash, making it particularly vulnerable to global supply disturbances. Although current reserves of 51 percent are considered sufficient for the upcoming sowing season, experts warn that prolonged instability could lead to shortages in future crop cycles [5].
Interruptions in ammonia and gas supplies have simultaneously increased production costs for domestic fertiliser manufacturers, exposing the structural weaknesses associated with India's reliance on Gulf-based energy imports [6]. In response, the government has accelerated efforts to diversify suppliers by strengthening ties with countries such as Russia, Belarus, and Morocco in order to secure long-term fertiliser availability [7].
Figure 1 highlights India's vulnerability and import dependence on fertilisers. For farmers, higher fertiliser prices have translated directly into increased cultivation expenses. Fertilisers remain critical for sustaining yields of staple crops such as rice and wheat. As prices rise, many farmers reduce fertiliser application to control costs, a strategy that can lower productivity and threaten food security over time [8]. Agricultural economists caution that continued shortages could eventually lead to lower crop output and delayed increases in food prices.
Figure 1: India's fertiliser vulnerability during the Middle East crisis
At the same time, the conflict has generated volatility in global oil and gas markets. Disruptions in the Hormuz corridor have pushed crude oil prices upward, echoing trends seen during the Russia-Ukraine conflict of 2022–23 [9]. For India, this creates a dual challenge: higher fuel import bills intensify inflationary pressures, while expensive LNG constrains fertiliser production capacity. Although agriculture is fundamentally biological, it is deeply dependent on energy – diesel powers irrigation systems, machinery, and transportation, while natural gas is central to fertiliser production [10]. Consequently, rising oil prices contribute directly to cost-push inflation across the agricultural value chain. Currency depreciation during periods of global uncertainty further increases the landed cost of imports.
Trade flows have also come under strain. The Middle East is an important export market for Indian agricultural products such as rice, sugar, and tea. However, rerouted shipping routes, elevated insurance premiums, and delays in vessel movement have reduced trade efficiency and competitiveness. Meanwhile, fertiliser and energy imports are arriving at higher costs and with longer delays. Together, these developments are creating a twofold burden on Indian agriculture: production costs are rising while export earnings face growing uncertainty [11-12].
India's fertiliser subsidy framework, which protects farmers from international price volatility, is also under renewed pressure. Rising global fertiliser prices are increasing subsidy expenditures and stretching public finances. As the government absorbs much of the import shock, fiscal space for rural development and infrastructure investment narrows. Analysts warn that India could witness a repeat of the subsidy escalation experienced during the Russia-Ukraine crisis, when fertiliser subsidy costs surged sharply under similar global conditions [13]. Policymakers therefore face a delicate balancing act: maintaining subsidies supports agricultural production, but also widens fiscal deficits; reducing support could lower fertiliser use and weaken crop yields.
The combined impact of fertiliser shortages, rising energy costs, and transportation disruptions has heightened the risk of food inflation. Higher input costs are pushing up farm-gate prices, while supply-chain inefficiencies are increasing retail prices for consumers. Such inflation disproportionately affects lower-income households and places additional strain on India's food security mechanisms, including the Public Distribution System (PDS). Experts caution that prolonged disruptions during the monsoon cropping season could trigger a second wave of food-price inflation [14].
Beyond the immediate crisis, the conflict has exposed several structural vulnerabilities within Indian agriculture:
To address these weaknesses, India has begun pursuing reforms aimed at strengthening domestic fertiliser production, diversifying import sources, and encouraging the use of bio-fertilisers and renewable energy in agriculture. These initiatives are intended not only to stabilise supplies in the short term but also to improve long-term resilience against future geopolitical and energy-related disruptions [15].
The Middle East conflict has evolved into a multidimensional shock affecting global food systems. For India, the repercussions extend across fertilisers, energy, trade, fiscal management, and food prices. While rising cultivation costs and shipping disruptions are already visible, the long-term impact will depend on how effectively India adapts. Building stronger domestic capabilities, diversifying supply chains, and improving resource efficiency will be essential to protecting Indian agriculture from future global shocks.
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