Middle East Conflict Jolts India's Fertiliser Production

Crisil Ratings has projected a potential decline of 10-15% in India's domestic production of urea and complex fertilisers, attributing the shortfall to disruptions caused by ongoing conflicts in the Middle East.

To cushion the impact, a recent government directive has been put in place that allocates 70% of gas to urea manufacturers, aiding in the continuity of production. Despite these efforts, sector players may still confront heightened working capital needs and increased subsidy bills due to the rising prices of raw materials and imported fertilisers.

The Crisil report warns that prolonged disruptions, intensified by India's heavy dependence on Middle Eastern import sources for key fertiliser ingredients such as LNG and ammonia, could further affect the profitability and capacity utilisation of domestic manufacturers.