De-risking Fertiliser Supplies for India amid Rising Geopolitical Risks

This policy brief argues that diversification of import sources and products is essential to reduce excessive dependence on a limited set of countries, particularly in geopolitically volatile regions. Complementary measures include encouraging overseas investments in fertiliser minerals and production assets, accelerating domestic exploration of fertiliser resources, and rationalising regulatory and pricing frameworks to improve efficiency in nutrient use. Policy reforms such as the direct transfer of fertiliser subsidies to farmers and gradual price deregulation of macro nutrients is critical to promote balanced fertiliser application while easing fiscal pressures. It will plug leakages too, which are substantial (about 20 percent). If this seems too bold a reform in the short run, an alternative would be to put quantitative restrictions on sales based on farm size, cropping patterns, and recommended nutrient doses issued by State Agricultural Universities (SAU). This can be done with the help of AgriStack that government has been building for quite some time. The third option would be to at least bring urea under the Nutrient Based Subsidy (NBS) scheme. So, in brief, either carry out full-fledged price reforms ensuring in advance DBT to farmers, or put quantitative restrictions in accordance with SAU recommendations, or bring urea also under NBS. Together, these measures can enhance the resilience of India’s fertiliser supply chains and safeguard the stability of its food production system in an increasingly uncertain geopolitical environment. As they say, never lose an opportunity to reform when a serious crisis hits. And the time for that is now.