CII urges India to rethink the ‘3Fs’ as one inflation engine – Firstpost

India’s inflation dynamics are increasingly being shaped not by isolated shocks but by a tightly linked chain connecting fuel, fertiliser and food, the Confederation of Indian Industry (CII) has warned.

The industry body has called for a coordinated national “3Fs strategy”, arguing that global energy disruptions are now transmitted across the economy through fertiliser costs, logistics and food prices, amplifying pressure on household budgets and macroeconomic stability.

“The 3Fs are not three disparate pressures,” said Chandrajit Banerjee, Director General of CII. “Fuel feeds into fertiliser, fertiliser feeds into food, and all three feed into inflation, fiscal stress and household welfare. That is why it helps to treat this as a single, integrated economic challenge.”

The warning comes amid volatility in global crude and gas markets, driven by geopolitical tensions in West Asia and risks around key shipping routes such as the Strait of Hormuz.

CII said India’s vulnerability is structural due to heavy import dependence across the chain. It noted India imports around 88 per cent of crude oil, 90 per cent of phosphates and about 25 per cent of urea.

This exposure means global energy shocks quickly spill into fertiliser supply, farm input costs and retail food inflation, further amplified by freight costs and currency fluctuations.

CII identified fuel as the central link in the 3Fs chain and a key lever for reducing external dependence.

It recommended faster expansion of ethanol blending up to E30 under BIS standards and accelerated deployment of flex-fuel vehicles in high ethanol-producing regions.

It also proposed a national LNG trucking corridor to reduce diesel use in freight, alongside a long-term shift towards cleaner cooking alternatives such as electric cooking and green hydrogen where viable.

The fertiliser sector is under fiscal pressure due to global price volatility and reliance on imported inputs such as DAP, phosphoric acid and LNG, CII said.

It proposed moving towards Direct Benefit Transfer (DBT) for fertiliser subsidies using digital tools like banking networks, soil health data and mobile authentication. Pilot projects linking fertiliser distribution to digitised land and crop data were also suggested, along with gradual inclusion of urea under the Nutrient Based Subsidy (NBS) system.

CII said strong buffer stocks have provided near-term stability in food prices, but warned that rising fuel and fertiliser costs, currency weakness and monsoon uncertainty could reignite inflation.

Perishables such as tomatoes, onions and potatoes remain key risk drivers.

It recommended early release of buffer stocks, stronger action against hoarding, improved cold-chain logistics and expansion of Farmer Producer Organisations (FPOs). It also called for a climate adaptation mission for agriculture and deeper development of crop derivatives markets.

CII said India’s resilience depends on integrated policy across fuel, fertiliser and food. “A thoughtful 3Fs approach can protect growth today and prepare us better for tomorrow,” Banerjee said.