Fertiliser Industry Control in India

The fertiliser industry in India is heavily regulated, with the maximum retail price (MRP) of various fertilisers being controlled by the government. Urea is priced at Rs 266.5 per 45-kg bag, a rate unchanged since November 2012. Di-ammonium phosphate (DAP) has a government-fixed MRP of Rs 1,350 per 50-kg bag due to conditional subsidies.

Controlled and Decontrolled Fertilisers

• Urea: Government-fixed MRP at Rs 266.5 per 45-kg bag. 
• DAP: Although technically decontrolled, companies receive subsidies only if the MRP is Rs 1,350 per bag. 
• Other Fertilisers: Muriate of potash (MOP) and other complexes have prices in line with subsidy rates. 

Distribution and Movement Control

The government controls the distribution and allocation of fertilisers through a state-wise and season-wise supply plan. This plan dictates the movement of fertilisers from plants to retail points. Companies must follow government directives on supply distribution to various districts and dealers.

UP Government's Directive on Non-Subsidised Fertilisers

The Uttar Pradesh government has issued a directive prohibiting the sale of non-subsidised fertilisers by urea manufacturers, effective from January 1, 2023.

Implications and Industry Response

• Industry Concerns: Companies argue that the ban contradicts efforts to promote nutrient-efficient products and could deter innovation. 
• Tagging Allegations: Accusations of companies "tagging" by forcing farmers to buy non-subsidised products along with subsidised fertilisers. 
• Market Impact: The non-subsidised fertiliser market in UP is relatively small, valued at around Rs 1,300 crore compared to Rs 13,000 crore for subsidised fertilisers. 

Speciality Fertilisers

Speciality fertilisers like water-soluble nutrients and micronutrients are non-subsidised and used in high-value crops. These include products like calcium nitrate and zinc sulphate monohydrate, applied in lower doses for targeted nutritional benefits.

Pricing and Market Overview

• Pricing: Non-subsidised fertilisers range from Rs 60/kg to Rs 90/kg compared to subsidised products like urea at Rs 5.9/kg. 
• Market Size: The speciality market is approximately 0.4 million tonnes per year, in contrast to 67 million tonnes for subsidised fertilisers. 

Challenges and Opportunities

• Challenges: Restrictions on non-subsidised products may hinder market growth and innovation. 
• Opportunities: High-value crops benefit from speciality nutrients, enhancing productivity and soil health.