The war in West Asia has triggered an unlikely crisis for Indian carmakers: a critical shortage of high-purity urea used in the exhaust systems of BS-VI compliant diesel vehicles. To prevent the supply chain from stalling, the union government has now directed Gujarat Narmada Valley Fertilizers and Chemicals Ltd (GNFC), India’s sole producer of technical-grade urea (TGU), to ramp up output as imports dry up, three people aware of the development told Mint.
The government’s move follows efforts by the ministry of heavy industries and the ministry of chemicals and fertilizers to secure urea stocks for their respective user industries, and requests by auto industry lobby group Society of Indian Automobile Manufacturers (Siam) for increased TGU output, these people said.
While the ministry of heavy industries had sought additional TGU capacity for the automobile sector in March, the ministry of chemicals and fertilisers noted that urea was an essential commodity for the agriculture sector, especially ahead of the Kharif sowing season that starts in June, they added.
The development is hugely significant for India, the world’s largest importer of urea, which relies on foreign markets to meet 15% of its demand. India had a stockpile of about 6.1 million tonnes (mt) of urea as of 19 March, while estimated demand for the Kharif season is about 18.2 mt.
Between April 2025 and January 2026, India’s urea import bill surged 118% to $4.44 billion, up from $2.03 billion during the same period the previous fiscal year, commerce ministry data showed. In terms of volume, imports grew roughly 57% to 9.5 mt compared to 6 mt in the corresponding months of FY25. Saudi Arabia, the United Arab Emirates (UAE) and Qatar together account for nearly two-thirds of India’s urea imports.
TGU is typically more than 99% pure, while fertilizer-grade urea typically has a lower nitrogen concentration and higher impurities such as biuret, which can damage sensitive industrial equipment. The primary raw materials for both TGU and regular urea are ammonia and carbon dioxide.
‘Necessary but not sufficient’
GNFC currently has the capacity to make 120,000 tonnes of TGU a year, according to its website, while TGU demand from India’s auto sector is about 600,000 tonnes. Though the additional TGU capacity is essential for continuity of operations, it may not be completely adequate, according one of the people cited above. “There may be a deficit of about 16,000-18,000 tonnes per month,” this person said.
A second person told Mint that after discussions between the two ministries, the Centre resolved the issue by asking GNFC to increase its TGU manufacturing and utilise its full capacity. “TGU is made by GNFC, which has increased its production now. Alongside this, imports of TGU are also allowed. Imports of TGU have been affected due to the West Asia war, but have not stopped entirely,” this person said.
According to its latest annual report, GNFC’s TGU segment hit record-breaking daily and yearly production levels in FY25, contributing 20% of the company's industrial chemicals revenue.
Exploiting a lull
Prashant Vashisht, senior vice-president and co-group head of credit rating agency ICRA, said, "Fertilizer plants in India advanced their annual shutdowns, and urea demand is expected to be lower in the April-May period, before the sowing season. This could be the reason why the government is looking to increase TGU output. Urea supplies are stressed due to the West Asia war, since a significant amount of imports come from the region. Additionally, supplies of natural gas, which are crucial to make urea and are sourced from West Asia, have been adversely impacted due to the war.”
Nutan Kaushik, director general of Amity Food and Agriculture Foundation, said, “The feedstock for both urea and TGU is the same—ammonia and carbon dioxide. When the availability of these raw materials is adequate, there should be no problem in producing TGU.”
Queries emailed late on 14 April to the prime minister’s office, the ministry of heavy industries, chemicals and fertilizers, the ministry of agriculture and farmer welfare, GNFC, Siam, Maruti Suzuki, Tata Motors, Mahindra & Mahindra, and Ashok Leyland remained unanswered.
Canary in the coalmine
As little as 12 days after the conflict began on 28 February, the Society of Indian Automobile Manufacturers (Siam) flagged the looming shortage of TGU supplies to both ministries, following which the deliberations began, said the people cited above.
According to Siam’s plea to the government, which Mint has reviewed, TGU is used to produce diesel exhaust fluid (DEF) for vehicles that are compliant with India’s latest Bharat Stage VI emissions standards. The blockade on the Strait of Hormuz, which has halted TGU imports, could pose a risk to the “continuity of the country’s logistics and transport operations”, Siam said in its letter to the ministries dated 12 March.
Siam noted in its letter that GNFC was the only domestic manufacturer of TGU. “GNFC currently allocates approximately 15,000–20,000 metric tonnes per month for TGU production, depending on agricultural demand. However, this quantity meets only around 40–50% of the national requirement, with the balance demand being met through imports,” the letter read.