China’s Fertiliser Supply Freeze: A Threat to Indian Farmers and a Test of National Resilience

Introduction

In June 2025, China’s abrupt halt of specialty fertiliser exports to India, ongoing for over two months, has triggered a crisis in the heart of India’s agricultural sector. Specialty fertilisers—critical for high-value crops like fruits, vegetables, and cash crops—are indispensable for modern farming. With India importing approximately 80% of these inputs from China, the freeze threatens the kharif sowing season, farmer livelihoods, and national food security. Described as a “complete halt” by industry leaders, this disruption raises questions about China’s motives, its implications for India’s 140 million farmers, and whether it reflects a failure of India’s foreign policy. This article provides a comprehensive analysis of the crisis, exploring its causes, impacts, strategic dimensions, and India’s response, while offering insights into building long-term resilience.

India’s Dependence on Chinese Fertilisers: A Structural Vulnerability

Agriculture is the backbone of India’s economy, contributing 14% to GDP and sustaining over 60% of its 1.4 billion population. While India ranks as the world’s third-largest fertiliser producer, it relies heavily on imports to meet domestic demand, particularly for specialty fertilisers. These include water-soluble fertilisers (WSFs), controlled-release fertilisers (CRFs), slow-release fertilisers (SRFs), micronutrient fertilisers, and bio-stimulants, which enhance nutrient efficiency, boost yields, and support sustainable farming practices for high-value crops.

Scale of Dependence

• Specialty Fertilisers: India imports 150,000–160,000 tonnes annually from China, accounting for 80% of its needs during the June–December sowing window.
• Conventional Fertilisers: In FY24, China supplied 19.17% of India’s di-ammonium phosphate (DAP) imports (8.47 lakh tonnes) and 1.85 million tonnes of urea.
• Market Dynamics: The specialty fertiliser market is projected to grow at a 9.19% CAGR by 2029, driven by demand for precision agriculture.

Why the Reliance?

India’s domestic production of specialty fertilisers is limited due to:

• Low Volumes: Small-scale production is economically unviable compared to China’s economies of scale.
• Technological Gaps: Advanced fertiliser formulations require cutting-edge technology, which Indian firms are still developing.
• Cost Constraints: High production costs deter investment in domestic capacity.

Companies like Deepak Fertilisers, Paradeep Phosphates, and Nagarjuna Fertilisers are expanding in this segment, but their output falls short of demand. This structural dependence on China exposes India to supply chain risks, as evidenced by recurring disruptions.

The Crisis: China’s Fertiliser Export Halt

As of June 2025, China has stopped specialty fertiliser exports to India for over two months, while continuing shipments to other countries. Rajib Chakraborty, President of the Soluble Fertilizer Industry Association (SFIA), stated, “China has restricted supplies for years, but this is a complete halt.” Unlike past disruptions, no formal ban has been announced. Instead, Chinese authorities have withheld inspection clearances for India-bound consignments, creating a de facto embargo through bureaucratic delays.

Historical Context

This is not an isolated incident:

• 2021: China reduced phosphatic fertiliser exports (40–45% of India’s imports), citing domestic demand and production constraints.
• 2023: Approximately 500,000 metric tons of urea were held up at Chinese ports due to export curbs amid global price surges.
• 2025: The current freeze targets specialty fertilisers, critical for high-yield crops, amplifying its impact.

Modus Operandi

China’s use of non-tariff barriers—inspection delays and clearance denials—mirrors its tactics in other sectors, such as rare earths and magnets. This approach allows Beijing to disrupt trade without violating World Trade Organization (WTO) rules, maintaining plausible deniability while achieving strategic objectives.

Why China Halted Fertilisers: Motives and Strategies

China’s decision appears to be a calculated move, blending geopolitical, economic, and strategic objectives. While Beijing has not issued an official statement, the following factors likely underpin the freeze:

1. Geopolitical Coercion

• Strained India-China Relations: Since the 2020 Galwan Valley clash, which killed 20 Indian soldiers, bilateral ties have deteriorated. India’s countermeasures—banning Chinese apps, scrutinizing investments, and imposing tariffs—have provoked Beijing.
• India’s Global Alignments: India’s participation in the Quad (with the US, Japan, and Australia) and supply chain resilience initiatives signals a shift toward Western alliances, positioning India as a counterweight to China. The fertiliser freeze may be retaliation for India’s strategic realignment.
• Economic Warfare: Former Foreign Secretary Vijay Gokhale described such actions as “testing economic sanctions,” akin to China’s restrictions on Australian coal or Lithuanian goods. By targeting agriculture, China exploits India’s import dependence to exert pressure.

2. Economic Leverage

• Supply Chain Dominance: China controls global supply chains for fertilisers, APIs, and rare earths. Restricting fertiliser exports reinforces its economic influence over import-reliant nations.
• Market Manipulation: Global fertiliser prices have surged due to the Russia-Ukraine conflict and West Asian tensions. China may be redirecting supplies to higher-paying markets or conserving them for domestic use, as seen in 2023 when state-owned firms prioritized local farmers.

3. Domestic Prioritization

• China has cited domestic agricultural needs in past export curbs, particularly during planting seasons. With global shortages driving up input costs, Beijing may be safeguarding its own food security, though the selective halt to India suggests additional motives.

4. Strategic Non-Tariff Barriers

• By using procedural delays, China avoids WTO scrutiny while achieving trade disruption. This tactic provides flexibility to escalate or de-escalate based on diplomatic or economic developments.

Impacts on Indian Farmers: A Multifaceted Crisis

The fertiliser freeze threatens India’s agricultural ecosystem, with ripple effects across the economy and society. The key impacts include:

1. Disruption of the Kharif Season

• Critical Timing: The kharif season (June–September) depends on specialty fertilisers for high-value crops like fruits, vegetables, and cash crops. The freeze could reduce yields in states like Punjab, Haryana, Uttar Pradesh, and Maharashtra.
• Conventional Fertiliser Shortages: DAP and urea shortages, compounded by the specialty fertiliser crisis, threaten wheat, pulses, and mustard cultivation, critical for food security.

2. Financial Strain on Farmers

• Price Surges: Specialty fertilisers are non-subsidized, and their scarcity has driven up costs, burdening small and marginal farmers, who constitute 86% of India’s farming community.
• Global Volatility: Fertiliser prices have been volatile since the Russia-Ukraine conflict, with India’s import costs rising. In FY21, the fertiliser subsidy bill jumped 62% to ₹1.3 lakh crore, and the current crisis could push subsidies beyond ₹1.79 lakh crore (2023-24 estimate).

3. Limited Domestic Alternatives

• Production Gaps: India’s specialty fertiliser industry is nascent, with domestic output meeting less than 20% of demand. Scaling up requires years of investment and technological upgrades.
• Alternative Suppliers: Imports from Jordan, Russia, Morocco, and Europe are being explored, but higher costs and logistical delays hinder timely delivery. A fertiliser industry executive noted, “Landing supplies before the sowing window is nearly impossible.”

4. Food Security and Economic Risks

• Rising Demand: India’s food grain requirement is projected to reach 300 million tonnes by 2025, necessitating 45 million tonnes of nutrients annually. Fertiliser shortages could undermine productivity, driving food inflation and rural distress.
• Economic Impact: Agriculture supports 600 million livelihoods. Reduced yields could lower rural incomes, weaken demand, and strain India’s post-COVID economic recovery.

5. Environmental and Long-Term Concerns

• Overuse of Substitutes: Farmers may resort to excessive urea or low-quality fertilisers, degrading soil health and increasing environmental pollution.
• Supply Chain Vulnerability: Over-reliance on imports exposes India to global disruptions, as seen during the Russia-Ukraine conflict and earlier Chinese curbs.

Is This a Failure of India’s Foreign Policy?

The fertiliser crisis prompts a critical examination of India’s foreign policy, particularly its management of economic dependencies and relations with China. The issue can be analyzed through competing perspectives:

Arguments for a Foreign Policy Failure

1. Over-Reliance on China:
   • India’s 80% dependence on Chinese specialty fertilisers reflects a strategic oversight. Despite post-Galwan efforts to reduce Chinese influence, critical imports like fertilisers, APIs, and rare earths remain heavily China-dependent.
   • The failure to anticipate China’s use of non-tariff barriers suggests inadequate trade intelligence and contingency planning.
2. Escalating Tensions:
   • India’s restrictive measures—app bans, investment scrutiny, and tariffs—have strained ties with China, limiting diplomatic channels to resolve trade disputes. The fertiliser freeze may be a direct consequence of these actions.
   • India’s alignment with the Quad and anti-China trade initiatives has heightened Beijing’s perception of India as a rival, prompting economic retaliation.
3. Slow Diversification:
   • India has been slow to secure long-term fertiliser supply agreements with alternative suppliers like Russia, Morocco, or Saudi Arabia. Stronger trade alliances could have mitigated the crisis.
   • The lack of robust global partnerships to counter China’s supply chain dominance has left India exposed.

Arguments Against a Foreign Policy Failure

1. Proactive Self-Reliance Efforts:
   • The “Aatmanirbhar Bharat” campaign aims to boost domestic fertiliser production. Since 2012, six new urea plants have added 76.2 lakh metric tonnes to capacity, reducing urea imports. Similar investments are underway for specialty fertilisers.
   • Initiatives like nano-urea and organic fertilisers signal a shift toward sustainable, self-reliant agriculture, though results will take time.
2. Crisis Management:
   • India is responding swiftly by sourcing fertilisers from alternative suppliers, leveraging buffer stocks, and coordinating with states. A government official asserted, “China cannot hold Indian agriculture hostage.”
   • Long-term contracts with Russia, Saudi Arabia, and Morocco are being negotiated to diversify supply chains.
3. Global Context:
   • The crisis is part of global supply chain disruptions, including the Russia-Ukraine conflict and West Asian tensions, which have strained fertiliser markets worldwide. China’s actions may reflect domestic priorities rather than a targeted attack on India.
   • India’s fertiliser subsidies have shielded farmers from global price spikes, demonstrating effective economic management.

Balanced Assessment

The fertiliser freeze is not a complete foreign policy failure but exposes vulnerabilities in India’s trade and supply chain strategies. While India has initiated self-reliance and diversification efforts, their slow pace and limited scale have left the country reliant on China. The crisis highlights the need for:

• Strategic Diversification: Faster agreements with alternative suppliers.
• Diplomatic Engagement: Balancing firmness with pragmatic dialogue to resolve trade disputes.
• Domestic Capacity: Accelerated investment in fertiliser production.

India’s foreign policy must evolve to address the realities of economic interdependence and geopolitical rivalry, particularly with a dominant player like China.

India’s Response: Immediate and Long-Term Strategies

India is tackling the crisis through a multi-pronged approach, balancing immediate relief with long-term resilience:

1. Immediate Measures

• Alternative Suppliers: Indian firms are importing specialty fertilisers from Jordan, Russia, Morocco, and Europe, though costs and logistics pose challenges.
• Buffer Stocks: The government is deploying DAP and urea reserves to mitigate shortages, with states coordinating distribution.
• Price Stabilization: Subsidies are being expanded to shield farmers from price surges, though this strains public finances.

2. Long-Term Strategies

• Domestic Production:
  • Investments in specialty fertiliser manufacturing are being prioritized, with policy reforms to streamline licensing and incentivize innovation.
  • The revival of urea plants (e.g., Ramgundam, Gorakhpur) offers a model for scaling up specialty fertiliser capacity.
• Sustainable Alternatives:
  • Promotion of nano-urea, organic fertilisers, and bio-stimulants to reduce chemical fertiliser dependence.
  • Training programs to encourage precision farming and balanced nutrient management.
• Supply Chain Diversification:
  • Long-term contracts with fertiliser-rich nations to ensure stable supplies.
  • Regional cooperation with South Asian countries to create a collective buffer against global disruptions.
• Technological Upgrades:
  • Partnerships with global firms to access advanced fertiliser technologies.
  • R&D investments to develop cost-effective, high-efficiency fertilisers.

3. Diplomatic and Trade Initiatives

• Engaging China: India is pursuing dialogue to resolve inspection delays, though geopolitical tensions limit progress.
• Global Partnerships: Strengthening ties with the US, EU, and ASEAN for trade and technological support.
• WTO Advocacy: Exploring WTO mechanisms to challenge China’s non-tariff barriers, though outcomes may be slow.

4. Building Resilience

• Public-Private Partnerships: Collaborations to boost fertiliser innovation and production.
• Farmer Support: Expanding credit access, insurance, and extension services to mitigate financial losses.
• Policy Reforms: Streamlining regulations to attract investment in the fertiliser sector.

Conclusion: A Call for Strategic Resilience

China’s fertiliser supply freeze is a wake-up call for India, exposing the risks of over-reliance on a geopolitically adversarial nation. The crisis threatens the livelihoods of millions of farmers, food security, and economic stability, with far-reaching implications for India’s 1.4 billion people. While geopolitical tensions, economic leverage, and domestic priorities drive China’s actions, India’s response must focus on reducing vulnerabilities and building resilience.

The fertiliser crisis is not solely a foreign policy failure but a symptom of broader challenges in managing economic dependencies in a volatile global landscape. India’s efforts to diversify supply chains, boost domestic production, and promote sustainable agriculture are steps in the right direction, but they require urgency and scale. As Prime Minister Narendra Modi emphasized at the 2024 G20 Summit, global crises like food and fertiliser shortages disproportionately impact the Global South, underscoring the need for self-reliance.

By investing in its farmers—the backbone of the nation—India can transform this crisis into an opportunity to strengthen its agricultural ecosystem, secure food supplies, and assert economic sovereignty. The path forward demands bold policy, strategic diplomacy, and unwavering commitment to the millions who till the land.

Sources

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