As the kharif sowing season begins, India faces a storm that combines geopolitics, food security, ecological damage and fiscal stress. The Prime Minister has launched a ‘Save the Fields’ campaign. The Agriculture Ministry is pushing PM-Pranam to reduce chemical fertilizer use and promote alternate nutrients.
Yet the same government may end up spending close to ₹3 trillion this year subsidizing those very chemicals. This is a central contradiction in India’s agricultural policy.
India is the world’s second-largest consumer of fertilizers, using nearly 65 million tonnes annually. Of that, almost one-third is import dependence by volume. Urea production needs natural gas, 80% of which is imported. Potash is almost entirely imported. Inputs for phosphatic fertilizer are also mostly imported.
The Iran war’s choke of the Strait of Hormuz has exposed India’s vulnerability just as farmers prepare for paddy, cotton, pulses and oilseeds.
The government responded by putting fertilizer plants on the priority list for gas supply. Stocks are being built up. States have been asked to prevent hoarding and black marketing. Maybe urea sales will be supervised under police protection. A fertilizer shortage will directly affect sowing decisions, yields, farm income and eventually food prices.
But the larger problem is not temporary shortages but permanent price distortions. Urea is sold to farmers at a fixed price of about ₹242 per 45kg bag, unchanged for years. At today’s global prices of around $950, the farmer pays barely 6% of its true economic cost. The rest is absorbed by the exchequer as subsidy. The subsidy tells the farmer: use more urea, it’s practically free.
That signal contradicts every sermon on soil health. PM-Pranam asks farmers to use less chemical fertilizer. Save the Fields aims to protect soil. Agricultural scientists say India must move towards balanced nutrition, organic matter, micronutrients, bio-fertilizers and precision application. But the price system says the opposite. Cheap urea overwhelms all advice.
The ecological cost is devastating. Excessive urea usage has grossly distorted the NPK balance of nitrogen, phosphorus and potassium. In Green Revolution belts, soil organic matter has depleted, groundwater is falling and even mediocre yields increasingly depend on chemical support.
This subsidy model has exhausted our water, soil and ecology. The fiscal cost is equally worrying. If global prices stay high, the subsidy bill could cross 3 trillion. That is money we cannot use for irrigation, rural roads, storage, extension services, climate-resilient seeds, agricultural research or crop insurance.
Since fertilizer is one of India’s most tightly controlled sectors, for decades there has been no fresh private domestic investment in production despite large demand. Local producers wait for cost reimbursement, and long delays hurt working capital. Foreign suppliers, meanwhile, have to be paid promptly.
The Iran crisis is thus an opportunity. It offers an alibi that policymakers need. We must move away from a system that is no longer fiscally, environmentally or strategically sustainable. But reform must be sequenced, not reckless.
Sri Lanka’s 2021 move is a cautionary tale. It banned chemical fertilizers overnight, sans a transition plan, and devastated its crops within a season. India cannot gamble with food security, especially with 800 million people receiving free grain. But the sector’s gross price distortion must end.
To reform the subsidy regime, we must shift it from the product to the farmer. Instead of subsidizing every bag of urea regardless of who buys it—large farmer, small farmer, diverter, smuggler—transfer cash directly to cultivators.
Economist Ashok Gulati estimates that a direct per-hectare transfer of ₹6,000–7,500 would adequately compensate small farmers while saving ₹30,000–40,000 crore annually even before prices are rationalized.
Agriculture minister Shivraj Singh Chouhan acknowledged in February 2026 that it was time for a national debate on this kind of direct benefit transfer (DBT). It could be linked to acreage, crop, soil health cards and recommended nutrient use.
The DBT should be transparent, capped and progressive. The tech back-up now exists to do this.
India’s AgriStack digitizes land records. Over 230,000 retail points-of-sale link fertilizer purchases to Aadhaar. Identifying beneficiaries (actual cultivators rather than landowners) is less of a hitch today.
Andhra Pradesh’s Rythu Bharosa scheme and Odisha’s Kalia programme are workable models for reaching landless cultivators and tenant farmers with direct support. They account for over a third of India’s farm output, so any DBT scheme that ignores them will fail.
Urea price correction is a must. India also needs a strategic fertilizer security framework since it is closely linked to food security. This calls for diversified import sources, long-term contracts and more joint ventures for production in gas- and mineral-rich countries. It also demands investment in bio-fertilizers, nano fertilizers, composting, green manure and precision agriculture.
The Iran war did not create India’s fertilizer problem. It merely exposed it. We must protect farmers, not price distortions, and subsidize cultivation, not chemical overuse. We must aim to defend food security, not frozen urea prices. The current crisis has given India political cover to do what experts have recommended for two decades.
The author is senior fellow with Pune International Centre.