Streamlining Fertiliser Industry Regulations in India
The Indian government is considering regulatory changes to simplify the approval process, decriminalize minor breaches, and adjust penalties within the fertiliser industry. This is part of an effort to ease constraints in one of the country's most heavily regulated sectors.
Current Challenges
- Fertiliser is regulated under the Essential Commodities Act with extensive state control over manufacturing, imports, pricing, and distribution.
- The industry is described as "inspector-infested," hindering innovation.
- The government spent ₹1.9 lakh crore in subsidies in the last fiscal year, significantly impacting the sector.
- Excessive application of certain nutrients has led to soil health degradation and increased fiscal burden.
- Long delays in the product registration process, with new soil nutrient products taking over 800 days for registration in India.
Proposed Reforms
- The government is aligning fertiliser policies with the proposed Jan Vishwas Siddhant, a framework recommended by a Niti Aayog-led high-level committee.
- This framework suggests eliminating licences, permits, and no-objection certificates, ending the ‘inspector raj’, and moving routine inspections to accredited third parties.
Fertiliser Types and Regulation
- Subsidised fertilisers include urea and phosphate & potassic (P&K) fertilisers, sold at controlled prices under the nutrient-based subsidy scheme.
- 'Decontrolled' fertilisers like muriate of potash (MOP) and certain complexes require compliance with maximum retail prices according to notified subsidy rates.
- Non-subsidised or ‘specialty’ fertilisers, such as calcium nitrate and water-soluble fertilisers, are market-driven.
- The 1985 Fertiliser Control Order grants broad powers to officials for enforcement, including raids and arrests for minor breaches.
Industry Feedback
- Industry representatives have highlighted the bottlenecks and legal hurdles they face under the current regulatory regime.
- There is an emphasis on the need for regulatory reforms to promote innovation and improve efficiency in the sector.
