NEW DELHI: India plans to pay in rupees for its first long-term urea import deal with Iran to hedge itself from global supply disruptions, higher prices and forex volatilities, sources familiar with the matter said, complicated now by Russia’s invasion of Ukraine.

India halted urea imports from Iran in 2019 under pressure from tough US sanctions on Tehran and government data show that Asia’s third-largest economy turned to countries such as China, Ukraine and Russia to meet its demand for the crop nutrient.

Last year, some Indian states faced shortages of urea after “abrupt” export restrictions by China amid high global prices, one of the sources said. “Now, the Russia-Ukraine issue has added to uncertainties over supplies and prices ... so our aim is to secure supplies at reasonable rates,” the source said. India is a top importer of urea and other soil nutrients needed to feed its huge agriculture sector, which employs about 60 percent of the country’s workforce and accounts for 15 percent of $2.7 trillion economy.

The federal government caps the retail price of urea and reflects the extra import costs as a subsidy in the federal budget. It also gives subsidies to local manufacturers of urea for selling the product at state-set low prices.