NEW DELHI: Confederation of Indian Industry (CII) has urged the government to adopt an integrated policy approach to tackle the interconnected challenges of Fuel, Fertilizer and Food, warning that rising geopolitical tensions in West Asia could significantly increase inflationary and economic pressures in India.
The industry body cautioned that higher crude oil prices, rising fertilizer costs, transportation expenses and supply-chain disruptions could adversely affect farmers, consumers and overall economic stability.
‘Fuel, Fertilizer and Food Are Deeply Linked’
Chandrajit Banerjee, Director General of CII, said the three sectors are closely interconnected and directly influence inflation, fiscal stability and household welfare.
“Fuel feeds into fertilizer, fertilizer feeds into food, and all three feed into inflation, fiscal stress, and household welfare,” Banerjee stated.
He emphasised that India needs a coordinated and forward-looking strategy to reduce vulnerability to global shocks.
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India’s Import Dependence Raises Concerns
CII highlighted India’s heavy reliance on imports in the fuel and fertilizer sectors as a major vulnerability during geopolitical crises.
According to the industry body:
- India imports around 88% of its crude oil
- Nearly 90% of phosphates are imported
- About 25% of urea requirements depend on imports
CII also pointed out that a large portion of India’s crude oil and LNG imports pass through the strategically sensitive Strait of Hormuz, increasing exposure to disruptions arising from tensions in West Asia.
Rising Costs Could Impact Multiple Sectors
The organisation warned that higher energy and transportation costs are likely to affect:
- Agriculture
- Manufacturing
- Logistics
- Food supply chains
This, in turn, could lead to broader inflationary pressures on Indian households.
CII, however, acknowledged the government’s initial efforts to cushion consumers from fuel price shocks and prioritise gas supply to critical sectors.
CII Recommends Major Fuel and Energy Reforms
Push for Ethanol and Alternative Fuels
To reduce dependence on imported fuels, CII recommended:
- Accelerating ethanol blending targets from E22 to E30
- Promoting flex-fuel vehicles in ethanol-producing states
- Expanding alternative fuel adoption
LNG Trucking and Logistics Reforms
The organisation also proposed a national framework for LNG-based long-haul trucking with:
- Dedicated refuelling corridors
- Incentives for adoption
- Transparent pricing systems
The proposal aims to reduce logistics costs and diesel dependence.
Long-Term Energy Security Measures
CII suggested faster progress in:
- Domestic oil and gas exploration
- Expansion of Strategic Petroleum Reserves
- Diversification of crude oil import sources
- Investment in bio-CNG, methanol blending and coal gasification
- Development of Small Modular Reactors (SMRs)
- Promotion of green hydrogen
Fertilizer Subsidy Burden Could Increase
Farmers May Face Rising Input Costs
CII warned that rising international fertilizer prices could significantly increase India’s fertilizer subsidy burden due to reliance on imported:
- DAP
- Phosphoric acid
- LNG
- Urea feedstock
Recommendations for Fertilizer Reforms
To improve efficiency and protect farmers, CII proposed:
- Phased Direct Benefit Transfer (DBT) for fertilizer subsidies
- Integration of digital land records and crop data
- Use of rural banking networks and soil health data
- Bringing urea under the Nutrient Based Subsidy (NBS) framework
According to Banerjee, the reforms are intended to strengthen support for small and marginal farmers while improving sustainability and reducing excessive nitrogen use.
Food Inflation Risks Remain Elevated
Fuel and Fertilizer Costs Could Push Food Prices Higher
Despite strong foodgrain production last year, CII cautioned that:
- Rising fuel prices
- Higher fertilizer costs
- Rupee depreciation
- Monsoon uncertainty
could increase food inflation in the coming months.
Focus on Tomato, Onion and Potato (TOP) Crops
The organisation identified Tomato, Onion and Potato (TOP) crops as major contributors to food price volatility and suggested:
- Early release of buffer stocks
- Use of the Price Stabilisation Fund before the lean season
- Stronger action against hoarding and speculative trading
Need for Better Cold Chains and FPO Networks
CII also recommended:
- Expansion of cold-chain infrastructure
- Improved transport systems
- Stronger farmer-to-consumer markets through Farmer Producer Organisations (FPOs)
Climate Adaptation Mission Suggested
For long-term resilience, the industry body proposed a dedicated Mission for Climate Adaptation in Agriculture supported by:
- Weather intelligence tools
- Agronomy systems
- Better crop pricing mechanisms
Banerjee stressed that food inflation disproportionately affects vulnerable households and that stronger storage, logistics and market systems will be essential for long-term food security.
Opportunity for Structural Reforms
CII said the current global crisis also presents India with an opportunity to undertake structural reforms across the fuel, fertilizer and food sectors.
According to the industry body, timely reforms could help India emerge stronger, more self-reliant and better equipped to handle future global economic shocks.
