Govt Prohibits Urea Plant Shutdowns to Avert Shortage Amid Calls for Regulatory Reform

The government has prohibited fertilizer companies from scheduling plant shutdowns in FY26 to ensure that there is no shortage of urea for farmers during the kharif and rabi seasons.

In a note to top manufacturers earlier this month, the department of fertilizer said, “Considering the likely demand during ongoing kharif season and upcoming rabi season, it is imperative that urea producing units take urgent steps and not plan any shutdown during the current fiscal year 2025-26.” ET reported.

Widely used as a fertiliser, urea provides nitrogen to the soil which is important for soil development. Since India doesn’t produce ample urea to meet its requirement, it has to depend on imports to meet its domestic requirements.

As reported by ET, India produced 22.36 LMT of urea against the target of 22.86 LMT during May this year. However, the availability of urea was higher than the sales during the month, according to government data.

China has been restricting exports of phosphate-a-key ingredient for making DAP (ai-ammonium phosphate)-to India for over two months now. This has led to a shortage of DAP-the second-most used fertiliser-from the beginning of the ongoing kharif season.

Beijing has also halted shipment of specialty fertilisers, which are used to support the yield of fruits, vegetables and other remunerative crops. The reason for halt on exports by China has not been reported.

Outdated Fertiliser Rules Favour Imports

Undermining the “Make in India” initiative, the government’s “outdated” fertiliser regulations are creating an uneven field, favouring Chinese imports over domestic manufacturers and undermining the “Make in India” initiative, industry bodies said on May 24, reported PTI.

The fertiliser control framework’s concurrent nature-governed by both central and state authorities-has led to numerous amendments but has struggled to keep pace with evolving domestic needs and global developments, gradually coming to be seen as a relic of the legacy “Inspector Raj” and “License Raj”, they said.

The industry bodies called for comprehensive reforms including implementing "One Nation, One Licence" policies, ensuring regulatory parity between domestic and foreign manufacturers and capping inspector numbers to two per unit.

(With inputs from PTI.)