India plans fund to protect fertilizer production supply

India plans fund to protect fertilizer production supply as the government prepares to set aside over INR 600 crore to manage gas shortages impacting fertilizer plants.

The move comes as global LNG supply remains uncertain due to ongoing tensions in West Asia, which have disrupted energy flows and increased price volatility.

Fertilizer units depend heavily on liquefied natural gas, which makes up more than 80 perfect of production costs. With supply expected to drop to nearly 50–60 perfect of normal levels, several plants have already reduced operations or scheduled maintenance shutdowns, raising concerns ahead of the key kharif season when demand peaks across the country.

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To address this, India plans fund to protect fertilizer production supply by enabling quick purchases of LNG from the spot market. While costlier than long-term contracts, spot buying will help ensure plants resume operations without delays and maintain output levels. Officials believe this step will act as a buffer against sudden supply shocks.

India’s fertilizer demand reaches around 32–33 million tonnes during the kharif season, making steady production critical for agriculture. A prolonged gas shortage could push monthly output below 1.7 million tonnes, affecting crop yields and increasing pressure on food prices and overall inflation.

Alongside this step, the government is also exploring higher fertilizer imports, diversifying sourcing options, and coordinating with suppliers to avoid supply disruptions. The broader goal is to maintain stability in fertilizer production, support farmers during peak demand, and shield the agricultural sector from global energy shocks.