India Seeks 2.5 MT Urea Amid West Asia Supply Crisis

• India seeks 2.5 million tonnes of urea via global tender
• West Asia crisis disrupts fertiliser supply chains
• Govt diversifies sourcing to secure farm input supply

India is planning to purchase around 2.5 million tonnes of urea by holding a worldwide tender as it tries to ensure the supply of fertilizers in the face of growing tensions and disruptions in West Asia. The move signifies a forward looking step to make sure the country has enough fertilizers before the major kharif season when the consumption of fertilizers tends to increase significantly.

Indian Potash Limited (IPL), which has issued an international tender for large quantities, is the agency through which the purchase process is going on. The entire quantity is likely to be divided between the two coasts - approximately 1.5 million tonnes for the west coast and 1 million tonnes for the east coast - thus ensuring a well-balanced supply in different regions.

This tender is significantly larger than previous rounds of procuring fertilizers, which clearly shows the level of concern and urgency aimed at covering the supply risks. The step has both come and been triggered by major interruptions in the international fertilizer supply chain largely resulting from the geopolitical tensions in West Asia and the effective limitations on the shipments via the Strait of Hormuz.

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The latter being a major source of fertilizers as well as feedstock raw material like liquefied natural gas, which is necessary for the production of urea. Due to scarcity of resources and other logistic problems, there is a reduction in domestic production and a rise in prices worldwide. This is why India is on the lookout for new sources or supply.

India is however broadening its procurement beyond its usual suppliers in the Gulf to include Russia, North Africa, Southeast Asia and other global markets. Besides, the government is increasing the efforts to creating buffer stocks and ensuring the timely distribution of farmers, in the hope of not having supply shortages in time for the new agricultural season.

Looking at the matter from a less specific point of view, the fact of the matter shows that India is still a large importer of fertilizers and that its agricultural supply chain is at risk of being disrupted because of geopolitical tension. The Government is convinced that by speeding the import process and opening more procurement channels, it will be able to protect the nation's food security and sustain agricultural production notwithstanding the global uncertainties.