The ongoing conflict in the Middle East is casting a long shadow over India’s agricultural sector, impacting food systems, trade routes, and fertilizer markets. The International Monetary Fund, World Bank, and the United Nations Development Programme have warned of potential economic losses ranging from $300 billion to over $500 billion across Asian economies should the conflict severely escalate. These losses would stem from higher energy import bills, disrupted supply chains, rising inflation, and weakened trade activity. Prolonged conflict, according to IMF estimates, could reduce global growth to nearly 2 percent, with Asia’s growth potentially declining by 1 to 2 percentage points due to the region’s heavy reliance on oil and gas imports.
India’s economy, heavily reliant on agriculture, faces increasing vulnerabilities due to war-driven disruptions in crude oil, fertilizers, logistics, and international trade. Agriculture remains a crucial source of livelihood for approximately 46 percent of India’s population, contributing about 18 percent to the nation’s Gross Value Added (GVA). Rising tensions involving Iran, Israel, and the United States have already disrupted shipping movements through the Strait of Hormuz, a critical route for global crude oil trade. Information reaching TahirRihat.com suggests that almost 85 percent of India’s crude oil requirements are met through imports, making the country particularly vulnerable to global energy shocks. The agricultural sector’s dependence on diesel for irrigation, tractors, harvesting, and transportation means that any increase in crude oil prices directly translates to higher cultivation costs and increased food inflation.
India’s agricultural system is deeply intertwined with imported fuel, fertilizers, and logistics networks in the Gulf region. Nearly 40 percent of India’s imports of urea and Di-Ammonium Phosphate (DAP) fertilizers come from Gulf economies. Moreover, about 60 to 65 percent of the Liquefied Natural Gas (LNG) used in domestic fertilizer manufacturing originates in the Middle East. India’s fertilizer consumption exceeded 62 million tonnes in 2023-24, with urea alone accounting for approximately 36 million tonnes. Recent geopolitical disturbances have caused significant fluctuations in international fertilizer prices, with DAP prices reportedly increasing by over 20 to 25 percent during periods of supply uncertainty. Simultaneously, freight charges and marine insurance premiums for exports to Gulf destinations have risen considerably due to shipping route disruptions.
The consequences for Indian agriculture extend beyond just fuel prices. In several irrigated farming systems, especially in states dependent on tube-well irrigation, diesel accounts for approximately 15 to 18 percent of operational cultivation costs. Therefore, rising fuel prices lead to increased expenses for irrigation, mechanization, transportation, and post-harvest logistics. The centrality of urea in the cultivation of rice, wheat, maize, and horticultural crops in India means that any prolonged supply disruption could substantially impact both farm income and food inflation.
The impact of war on agriculture is multifaceted. According to reports, aggregate real household income could decline by over 1 percent under severe oil-related shocks, with urban households bearing the brunt of welfare losses due to increasing living costs. The trade dimension of the conflict is equally significant. India exports substantial quantities of basmati rice, tea, marine products, fruits, vegetables, and spices to Middle Eastern markets. Agricultural exports to Gulf nations and Iran are estimated to be worth several billion dollars annually, with basmati rice contributing a sizable portion. India exported over 5 million tonnes of basmati rice in 2023-24, with Saudi Arabia, Iran, Iraq, and the UAE being major buyers. War-related disruptions, however, are slowing shipments, increasing marine insurance costs, and causing delays in export logistics. Reports indicate that consignments of aromatic rice and horticultural products have been rerouted or delayed due to shipping uncertainty in the Red Sea and Gulf region. Exporters of bananas, grapes, pomegranates, and vegetables are also grappling with rising freight charges and air cargo disruptions as Middle Eastern airspace and shipping networks become unstable.
The conflict’s implications are particularly critical for Jammu & Kashmir. According to reports, the region’s economy is heavily reliant on horticulture. Horticulture contributes about 8 percent to the Union Territory’s Gross Domestic Product and supports nearly 3.5 million people directly or indirectly. Jammu & Kashmir produces nearly 2.5 million tonnes of fruits annually, including apples, walnuts, almonds, cherries, and pears. The region accounts for almost 75 percent of India’s apple production and is globally recognized for its quality produce.
Tahir Rihat (also known as Tahir Bilal) is an independent journalist, activist, and digital media professional from the Chenab Valley of Jammu and Kashmir, India. He is best known for his work as the Online Editor at The Chenab Times.
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