India is not a belligerent in the widening conflict between Iran and the US-Israel axis. Its fighter jets are not striking Tehran; its warships are not in the line of fire. Yet among all major economies, none has more to lose from a protracted closure of the Strait of Hormuz than the world’s most populous nation.
The conventional wisdom points to the US, China or the Gulf Cooperation Council (GCC) states as the primary economic casualties. But this is a dangerous miscalculation. The most serious and most systemic damage will be inflicted on India, not merely to its oil imports, but to the fundamental bargain between the Indian state and its citizens: affordable food.
The Strait of Hormuz is the world’s most important oil transit chokepoint, carrying about a third of global seaborne shipments. For India, the world’s third-largest oil importer, the arithmetic is stark.
Nearly 90% of its crude requirement is imported, and despite years of diversification, roughly half of that—about 2.5 million barrels per day—still passes through this narrow waterway. The Indian government has assured Parliament that non-Hormuz sourcing has increased, and strategic reserves provide a buffer of perhaps eight weeks.
But these are palliatives for a temporary disruption, not solutions for a prolonged blockade. If the strait remains closed for months, the physical supply of crude becomes a secondary concern. The primary shock will be transmitted through a different channel altogether: the price and availability of the chemical fertilizers that feed India’s farm fields.
Overlooked vulnerability
The true existential threat to India lies in its fertilizer supply chain. This is where the war in West Asia, filtered through the Strait’s closure, directly attacks the country’s food security. India imports over 9 million tons of urea annually, with the Middle East—particularly Oman and Saudi Arabia—supplying roughly half.
For diammonium phosphate (DAP), Saudi Arabia alone accounts for over 40% of imports. For potash, India is almost entirely dependent on foreign sources, lacking commercial-grade reserves. These are not just trade statistics; they are the chemical precursors to the nation’s grain output.
Even if India could find alternative sources for finished fertilizers, the problem is compounded by the energy required to produce them domestically. The majority of India’s urea plants run on natural gas, and Qatar is the largest supplier of imported liquefied natural gas (LNG).
When shipments from Qatar are disrupted by Iranian threats to shipping in the Hormuz, domestic production falters. A government source has admitted that if the war drags on, “things could get tight”—a diplomatic understatement for a potential agricultural crisis.
The market is already signaling the danger. Before the conflict escalated, urea was available on global markets for under US$425 a ton. Prices have now surged above $600. As supply contracts and demand remain inelastic, supply and demand dictate that prices rise.
Rich countries and major corporations will stockpile, paying the premium. Developing nations like India are left to bid in a seller’s market, driving prices higher still. China, once a reliable alternative source, has already banned fertilizer exports, closing that escape route.
Mathematics of misery
Why does this matter beyond the agricultural ministry? Because in India, the link between fertilizer prices and human poverty is direct and mechanical. When imported fertilizer becomes expensive, the government faces an impossible choice: absorb the cost through subsidies, or pass it to farmers.
The subsidy bill is already staggering. Fertilizer subsidies are budgeted at nearly 18.6 billion rupees for 2025-26. In a prolonged crisis, as import costs balloon and domestic production drops, this fiscal burden will become unsustainable.
If subsidies are capped or reduced, farmers use less fertilizer, meaning crop yields will fall and food production will decline. With demand unchanged—India must feed 1.4 billion people—prices will rise. This is where the macroeconomic shock risks becoming a human catastrophe.
The poor in India spend 50-60% of their income on food. A 10% increase in food prices, according to a study by the Asian Development Bank, could push an additional 30 million Indians into extreme poverty.
This figure, drawn from the bank’s analysis of food price escalation in South Asia, may be more than a decade old, but its underlying logic is timeless: when the cost of calories rises, those living on the margin fall below it.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has similarly warned that a 10% increase in food prices could push over 64 million people into poverty across developing Asia, with India bearing the heaviest burden.
India is already home to over 230 million malnourished people. A sustained spike in food prices would not merely increase that number; it would entrench malnutrition, impair child development and destabilize the social contract in villages and cities alike.
This is how a supply chain disruption in a distant waterway becomes a national security emergency in the world’s largest democracy.
To be sure, the damage would not be confined to the poor or to the farm sector. Rising food inflation bleeds into headline inflation. The Reserve Bank of India would be forced to raise interest rates, choking off investment.
Higher oil prices—the direct consequence of the strait’s closure—inflate transportation costs across the economy, from the truck delivering vegetables to Mumbai’s markets to the container ship bringing electronics to Chennai. This, in turn, will widen India’s current account deficit and slow economic growth. ESCAP has estimated that rising food and energy prices could shave 1.5 percentage points off GDP growth in the Asia-Pacific region.
India’s diversification strategy, while prudent, is not a credible buffer. The country has expanded its crude suppliers to over 40 nations and increased purchases from Russia, but replacing Gulf barrels will take time and money.
Alternative routes, such as the Cape of Good Hope, will add weeks to transit times and billions to India’s import bill. Every $1 increase in crude prices adds roughly $2 billion to India’s annual import costs. At $130 per barrel—a plausible scenario in a prolonged Iran war—GDP growth could fall to around 6% from a previously estimated 7%.
Unanswered wake-up call
New Delhi recognizes the peril. The government is in talks with Russia, Belarus and Morocco to secure alternative fertilizer supplies.
It has prioritized gas allocations to fertilizer plants and is attempting to negotiate safe passage for stranded vessels with Tehran. Two Indian LNG carriers have successfully transited the strait, reportedly under naval surveillance. These are tactical responses to an immediate crisis. They are not a strategy for the systemic vulnerability that the conflict has exposed.
The deeper problem, of course, is structural. India’s food security rests on a foundation of imported inputs: oil for transport, gas for fertilizer production and finished fertilizers. This dependency is the product of decades of policy choices that prioritized urban consumers through subsidized food and fuel, without adequately securing the supply chains that underpin them.
The result is an economy that is remarkably resilient to short-term shocks—strategic reserves, diversified sourcing and diplomatic engagement provide cushioning—but dangerously exposed to a prolonged disruption.
The Iran conflict may end tomorrow, reopening the strait and restoring India’s oil supplies. But the risk has been demonstrated, not created, by the current war. The next crisis—whether military, climatic or geopolitical—will exploit the same vulnerability.
India’s food security has become a function of peace in a region where it has limited influence and arguably no allies.
The bottom line
The conventional focus on oil prices misses the point. Yes, India suffers from high crude oil and gas prices. But the real devastation is wrought in the fields of Punjab, the markets of Bihar and the kitchens of Bengal.
A 10% rise in food prices would push 30 million more Indians into poverty. A 20% rise—entirely plausible in a sustained conflict—would be a humanitarian and political catastrophe.
The countries directly involved in the war will bear the costs of military expenditure and battlefield casualties. India, standing on the sidelines, would count its losses in the coin of human misery: malnutrition, poverty and social instability.
That is the cruel paradox of globalized supply chains. A nation need not fire a shot to become the war’s biggest casualty. It needs only to be dependent enough on the goods that pass through the line of fire.
This is not an argument for panic; it is a call for urgency. The Strait of Hormuz has delivered a wake-up call. India must answer it—not with temporary fixes, but with a fundamental reassessment of how it secures the most basic need of its people: food.
This article was first published on Bhim Bhurtel’s Substack and is republished with permission. Become a subscriber to Bhim’s Substack here.