India needs to view fuel, fertiliser and food as a single economic challenge rather than three separate issues if it wants to shield growth, farmers and consumers from external shocks triggered by the West Asia crisis, industry body Confederation of Indian Industry said on Wednesday.

The industry chamber warned that rising geopolitical tensions in West Asia are already pushing up energy and fertiliser prices, logistics costs, food inflation and currency volatility, creating a cascading effect across the economy.

“The 3Fs are not three disparate pressures,” said Chandrajit Banerjee, director general, CII. “Fuel feeds into fertiliser, fertiliser feeds into food, and all three feed into inflation, fiscal stress, and household welfare. That is why we believe it helps to treat this as a single, integrated economic challenge so that it makes navigating external shocks that much easier.”

India remains heavily dependent on imports in both energy and fertiliser. According to government data cited by CII, the country imports nearly 88% of its crude oil, 90% of its phosphates and 25% of its urea. A significant share of crude and LNG shipments passes through the Strait of Hormuz, making India vulnerable to disruptions in West Asia.

CII said the government’s initial response has helped cushion the impact on consumers by managing fuel price spikes and directing gas supplies toward priority sectors. However, it stressed that medium and long-term reforms are now critical as global uncertainty is likely to persist.

Push for alternative fuels and energy security

CII said fuel remains the most immediate pressure point but also offers the biggest opportunity to reduce import dependence. The chamber recommended a clear roadmap for introducing higher ethanol blends from E22 to E30 after the notification of new BIS standards. It also proposed accelerating the rollout of flex-fuel vehicles in ethanol-producing states and creating a national framework for LNG-powered long-haul trucking through vehicle incentives, refuelling corridors and transparent mechanisms. 

Beyond transport fuels, CII suggested gradually shifting part of LPG demand toward electric cooking, ethanol-based cooking solutions and green hydrogen where feasible.  For long-term resilience, the industry body called for faster domestic oil and gas exploration, expansion of the Strategic Petroleum Reserve and diversification of crude sourcing. It also recommended scaling up coal gasification, methanol blending, bio-CNG and nuclear power, including Small Modular Reactors.

“Boosting efficiency and scaling up home-grown alternatives are far more than near-term fixes; they form the very bedrock of India’s long-term economic security,” Banerjee said.

Fertiliser and food inflation in focus

CII also flagged risks to the fertiliser subsidy bill as elevated global fertiliser prices continue to pressure government finances. India remains dependent on imports of DAP, phosphoric acid, urea feedstock and LNG required for fertiliser manufacturing. To improve efficiency, the chamber proposed a phased shift of fertiliser subsidies toward a Direct Benefit Transfer model for farmers using digital banking systems, mobile authentication and soil health databases. It also recommended linking subsidised inputs to digitised land records, crop cycles and irrigation data, beginning with pilot districts.

In addition, CII called for gradually bringing urea under the Nutrient Based Subsidy framework to address excessive nitrogen use and soil degradation.

“The objective is to strengthen support, not reduce it,” Banerjee said. “By working together to route subsidy benefits directly and bring in data-driven insights, we can better safeguard the interests of small and marginal farmers, nurture soil health, and build resilience against volatile global prices.”

On food inflation, CII said India enters the current period with the advantage of a record food grain harvest last year. However, it cautioned that higher fuel and fertiliser costs, a weaker rupee and uncertain monsoons could still push up prices, especially for vegetables and edible oils. The chamber recommended early release of onion and tomato buffer stocks ahead of the August-to-November lean season and stricter action against hoarding under the Essential Commodities Act. It also called for better cold-chain infrastructure, transport support for perishables and expansion of farmer-to-consumer networks to reduce supply chain costs.

“Food inflation hits the most vulnerable households first and fastest, requiring a decisive yet measured response,” Banerjee said. “The lasting solution lies in modernised storage, faster logistics, sharper market intelligence and structurally shortening the journey from farm gate to consumer plate.”