New Delhi, May 21: The Confederation of Indian Industry (CII) has emphasized the need for India to adopt a coordinated national strategy to address the emerging ‘3F’ challenge—Fuel, Fertilizer, and Food. The CII highlighted that the ongoing crisis in West Asia is impacting both global and domestic markets, leading to rising energy and fertilizer prices, increased logistics costs, and heightened food inflation, which is putting pressure on the Indian Rupee.
CII Director General Chandrajit Banerjee stated that the three elements of the 3F challenge are interconnected economic issues. He explained that rising fuel prices lead to higher fertilizer costs, which in turn affect food prices. This chain reaction directly impacts inflation, government financial pressures, and the wallets of ordinary citizens.
The CII noted that India remains heavily reliant on imports of crude oil and fertilizers. According to government data, India imports approximately 88% of its crude oil, 90% of its phosphates, and 25% of its urea, with most supplies coming through the Strait of Hormuz. Therefore, geopolitical tensions in West Asia have a direct impact on India’s energy and food security.
While appreciating the government’s initial response, the CII acknowledged that the government has managed to minimize the burden of sudden fuel price hikes on consumers and redirected gas supplies to essential sectors. However, the CII believes that India must now work swiftly on both short-term relief and long-term reforms.
The CII suggested promoting ethanol blending to reduce dependence on fuel imports. The organization called for a clear roadmap for higher ethanol blends, ranging from E22 to E30, and for the rapid implementation of flex-fuel vehicles in states with higher ethanol production.
Additionally, the CII recommended establishing a national LNG-based infrastructure for long-haul trucks, which would include vehicle incentives, refueling corridors, and a transparent pricing system. The organization also advocated for gradually promoting domestic alternatives such as electric, ethanol-based cooking, and green hydrogen in place of LPG.
The CII stressed the need for India to accelerate domestic oil and gas exploration for long-term economic security. It also called for expanding strategic petroleum reserves, diversifying crude oil import sources, and rapidly developing alternative energy sources like coal gasification, bio-CNG, methanol blending, and nuclear power.
Chandrajit Banerjee emphasized that strengthening domestic options is not just a temporary solution but the foundation of India’s economic security.
The CII also pointed out the need for reforms in the fertilizer sector. It warned that rising global prices could lead to increased government spending on fertilizer subsidies. India continues to rely on imports of raw materials necessary for the production of DAP, phosphoric acid, and urea.
The organization suggested implementing a phased transfer of fertilizer subsidies directly to farmers’ bank accounts. This could utilize digital banking networks, mobile authentication, and land record data.
Moreover, the CII recommended gradually including urea in the Nutrient Based Subsidy (NBS) scheme to prevent issues like soil degradation and excessive nitrogen usage.
Despite record food grain production in India, the CII cautioned that rising fuel and fertilizer costs could lead to increased food inflation in the future, particularly affecting the prices of crops like tomatoes, onions, and potatoes, which significantly impact the overall food market.
The organization advised the government to release buffer stocks of onions and tomatoes into the market before the demand season from August to November. It also called for strict action against hoarding and speculation.
Furthermore, the CII recommended facilitating the transport of perishable agricultural produce between states, strengthening the cold storage network, and promoting markets that connect farmers directly with consumers.
Chandrajit Banerjee concluded that if India makes the right decisions now, it will be better equipped to face future global crises. He asserted that a robust and balanced 3F approach will not only shield the country from current economic challenges but also make it more secure and self-reliant in the future.
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