Daybreak - Can India's $22 billion fertiliser subsidy keep the Gulf War off your plate?

Episode Date: April 14, 2026

The Indian government approved a ₹41,534 crore fertiliser subsidy for the upcoming kharif season last week, a 12% increase from last year. The move comes as the Gulf War has severely disrupted India's fertiliser supply chains, with urea prices jumping 65% in just 40 days. India is the world's second largest fertiliser importer, and the Strait of Hormuz carries a significant share of both the finished fertilisers and the gas needed to make them domestically. The kharif season, which produces roughly 100 million tonnes of rice, begins in June. In this episode, host Snigdha Sharma looks at India's fertiliser subsidy policy and what its really doing for farmers during this crisis. Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Since late February, after the war broke out, our attention has mostly been focused on one thing. Fuel. Will the LPG keep coming? Will petrol prices spike? All legit questions, of course. But there is a second crisis moving through the same waters, one whose consequences may be visible a little bit later, but they will cut much deeper. You see, India is the world's second largest fertilizer importer by volume and value. as well. And most of it comes from the Gulf region, and a good chunk of that specifically

comes from the Strait of Hormuz. So, this war hits India at two levels simultaneously. First, finished fertilizers like urea, ammonia and the AP come directly from Gulf producers through the strait. And second, the LNG that powers India's own 30 domestic fertilizer plants also travel through that same passage. And when both of these lines are squeezed at once, the domino effect will play out much faster. For context, the Indian Farmers Fertilizer Cooperative, which is one of India's largest fertilizer producers, has already cut its output. Two national fertilizers' limited plants in Punjab shut down in March after the Gas Authority

of India reduced their gas supply by 40%. Meanwhile, in the last 40 days, global urea prices rose by 65%, from $482 per ton to $795. India, meanwhile, is still selling these fertilizers to farmers at a subsidized rate, which sounds reassuring until you look closer. Uria is being sold at $70 per tonne, which is roughly 11th of the current global price. The government absorbs that difference, and as global prices keep climbing, that bill keeps growing.

Last year alone, it was already $22 billion. This year, with Uria at $795 a ton, the fiscal pressure is unlike anything that India has ever faced before. And then, as if the supply crisis was not enough, the diplomatic situation has collapsed entirely. Two days ago, Trump announced that the U.S. Navy was a very. will block all maritime traffic entering and exiting Iranian ports after the peace talks in Islamabad collapsed over the weekend. Basically, now there is a second military power in a strait that was already choked by Iranian restrictions and mines since the end of February.

What all of this means for India is specific. Rice and wheat, the two crops that feed most Indians, together consume over 60% of the country's nitrogen fertilizers. Both crops are planted in the current. season, which begins in June. Farmers apply fertilizers during sewing and that window is just eight weeks away. So now

with the world's most important fertilizer route caught between two military powers, India's harvest is already in trouble. So here is the question that I am going to explore today. Does the farmer whose hands grow that harvest have any

idea what's coming? Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nekda Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that is worth understanding and worth your time. Today is Wednesday, the 15th of April. The story begins in the policy decisions of the 1970s that built modern Indian agriculture.

After the Green Revolution transformed India from a food deficit nation into a grain surplus one, nitrogen fertilizers became the foundation. of that success. To keep Eurya accessible, the government subsidized it heavily and kept subsidizing it decade after decade. Today, a 45-kalo bag costs a farmer $242.42, which is a price that has been unchanged since 2018. On the global market, on the other hand, this week, that same bag costs over $3,000. The government absorbs the difference. Last year, like I told you earlier, the bill came to over $22 billion, which is one of the largest agriculture subsidy programs in the world. So what happened over the years is that this price gap created a dependency that reshaped

Indian farming itself. Because urea was practically free, farmers used far more than their crops needed. A 2025 study of 31,000 fields found that 55% of rice farmers were already overusing nitrogen fertilizer. Five decades of cheap urea also made domestic fertilizer production structurally dependent on imported gas. India has 30 urea manufacturing plants almost all running on LNG, and 50% of that LNG comes from the Gulf. When the strait was tightened, India lost access to both imported fertilizer and the fuel

that was needed to make its own. And that dependency runs two layers deep. Rice consumes 37% of all nitrogen fertilizers used in India. Wheat consumes another 24%. Together, these are the crops that stocked the public distribution system feeding 800 million Indians and the crops of the Karif season that begins in June. India's current fertilizer stock stands at 18 million tons, as per the government's own statement. The Karif season requires 39 million tons.

The government says that it will bridge that gap through imports in April and May. But suppliers that it is turning to Russia, Morocco, Vietnam, Algeria, Egypt, are navigating the same disrupted global market. And China, which India has already approached for finished fertilizer products, has stopped exporting entirely prioritizing its own farmers first. That gap between 18 million tons and 39 million tons is not on its own. own a crisis. It is a kind of a target. Whether India can hit it in eight weeks through a disrupted global market with a straight now policed by two military powers is the question that nobody

has an answer to. Across Punjab, Haryana, Karnataka, farmers are panic buying fertilizer bags that they don't need yet because nobody has told them whether the government's plan will reach them in time. So when a crisis like this hits, who does the system actually protect. More on this in the next segment. Stay tuned. Every hour a farmer in India dies by suicide. The National Crime Records Bureau or NCRB recorded 10,786 such debts in 23 alone. Between 1995 and 2023, at least 3,994,206 farmers and agricultural laborers took their own lives. And researchers say that even this is an undercount, because the NCRB only counts those with formal land title. Tenant farmers and sharecroppers who own nothing and owe everything

do not make it into this data at all. And behind almost all one of these debts is debt. The National Statistical Office says that more than half of India's farming households are carrying loans right now. The average farmer's outstanding debt was 60% of their entire annual income, and that was before this crisis began. Agricultural credit outstanding stood at nearly 3 lakh crore rupees as of March 2025, according to Nabad. And over half of it is owed by small and marginal farmers. These are households where a single failed crop can mean defaulting on loans and pulling children out of school or sometimes even selling the land that makes farming possible for them.

Now, place this farmer in front of the current crisis. In early March, the Gas Authority of India cut the natural gas supply to urea plants by 40%, forcing two major Punjab plants to shut down. By late March, supply was partially restored by the government to 80% of normal. On April 8th, that is this month, the Union Cabinet approved a little. little over 41,000 crore rupees in fertilizer subsidies for Karif 2026. This is a 12% increase from last year. The government has since ramped up gas supply as well to plants by a further 23%. Stalks, the government says, are higher at this point than last year. So the official message from the

government right now is we have this under control. On the ground though, in Punjab, in Haryana and Karnataka, the experience is very different. A farmer in Ambala told the scroll that neither the government nor cooperative societies had communicated anything to them. No plan, no timeline, no guidance. A fertilizer retailer in Karnataka, 35 years in the business, told the Guardian that he had never seen panic like this before. Farmers are buying bags weeks before they need them and that empties the local shelves.

And when the shelves run dry, the farmer who could not afford to stock up early, which is the small farmer, the tenant farmer, who is the most stretched, has to go without. And here is the part that is hardest to sit with. The government already knows this crisis has a hidden buffer, which I actually mentioned before. India's own Minister of Chemicals and Fertilizers said publicly that farmers routinely take four bags of urea when their crops need to. So, fertilizer application could be cut down by 18 kilograms per hectare without losing a single kilo of yield. If farmers knew this, many would stretch their existing supply through this season.

And that information has not reached them yet. And in the absence of any clear communication from the state, farmers are doing the only thing that makes sense to them, which is buying whatever they can whenever they can. The subsidy system, which was built to protect farmers, clearly has its own blind spot. India is spending a lot of money subsidy. fertilizers as it should.

But as the economist Ashok Gulati pointed out in an opinion piece on the Indian Express, the subsidy flows through formal land ownership records. Tenant farmers who have no land records are left out entirely, and they are the people who end up being most exposed when supplies tightened. The Indian subcontinent region has already seen what happens when this kind of a system fails without warning. For example, in Sri Lanka in 2021. A sudden fertilizer shock, which was triggered by a government decision that wiped out agricultural yields in a single season.

And I'm sure you'll remember how it ultimately ended. The president had to flee the country. Sri Lanka's farmers also did not see it coming until it was too late to plant differently. India's farmers are planting right now. The Karif window will open in. in June. What gets planted in the next eight weeks and how much fertilizer goes into that soil will determine what we eat and at what price by the end of this year.

Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcast. To subscribe, head to the Ken.com and click on the Redmond.com. subscribe button on the top of the website. Today's episode was hosted and produced by my colleague Nika Sharma and edited by Rathif CN.