The Uttar Pradesh government has imposed a complete ban on the sale of non-subsidized fertilizers by companies authorized to sell subsidized products, citing complaints of tagging practices. Although subsidized fertilizer supplies will remain unaffected, the move is expected to impact the Rs 1,000-crore specialty fertilizer market in the state.
The almost completely regulated fertilizer industry has been stunned by a recent decision of Uttar Pradesh Government. In a government order issued on January 9, 2026, the state banned the sale of non-subsidized fertilizers in Uttar Pradesh by companies and distributors authorized to sell subsidized fertilizers. This ban has been made retroactively effective from January 1, 2026.
The order issued by the Fertilizer Section of the Directorate of Agriculture, Uttar Pradesh, said that except the permission for supply and sale of subsidized fertilizers, all non-subsidized fertilizers mentioned in the fertilizer sale authorization letters are banned in the state from January 1.
Letters informing them of this decision were sent to major fertilizer manufacturers and marketing companies on January 13. These also include cooperative giants Indian Farmers Fertilizer Cooperative Limited And Krishak Bharti Cooperative Limitedas well as Indian Potash Limited, Hindustan Fertilizers and Chemicals Limited, National Fertilizers Limited, Yara Fertilizers India Private Limited, Chambal Fertilizers and Chemicals Limited, Coromandel International Limited, Rashtriya Chemicals and Fertilizers Limited, Gujarat State Fertilizers and Chemicals Limited, Gujarat Narmada Valley Fertilizers and Chemicals Limited, Shriram Fertilizers and Chemicals And Narmada Bio-Chem Limitedamong others. A copy of the letter is available with Rural Voice.
Reason behind the ban
The state government cited complaints that subsidized fertilizers were being “tagged” with other fertilizers, forcing farmers to purchase additional non-subsidized products. The order mentions meetings held with industry representatives on this issue. After complaints continued, the government decided to impose a complete ban on the supply and sale of non-subsidized fertilizers by such entities.
a highly regulated sector
Industry sources describe fertilizers as one of the most strictly regulated sectors in India. The sale and pricing of urea is completely controlled. Since November 2012, the maximum retail price (MRP) of urea has remained unchanged at Rs 266.50 per 45 kg bag.
Under the Nutrient Based Subsidy (NBS) scheme, the maximum retail price of the most sold deregulated fertiliser, di-ammonium phosphate (DAP), has been fixed at Rs 1,350 per 50 kg bag from 2022. The government sets subsidy levels to maintain this price stability.
Apart from DAP, more than 30 complex fertilizers including various NPK grades are covered under the NBS regime. While companies are technically free to set their own prices, these are indirectly influenced by government subsidies and are subject to a number of conditions.
Market size and impact
India’s total annual fertilizer sales are estimated to be approximately 670 lakh tonnes. The contribution of Urea is about 400 lakh tonnes, while the contribution of DAP is about 100 lakh tonnes.
For subsidized fertilizers, the Central Government issues indents under the Fertilizer Control Order based on the demand estimates of the Ministry of Agriculture and monitors their circulation and sale. The despatch, state-wise and district-wise allocation of imported and domestically produced subsidized fertilizers is closely monitored.
The decision of the Uttar Pradesh government does not affect subsidized fertilizers but directly affects special and other non-subsidized fertilizers. Industry sources estimate subsidized fertilizer sales (on MRP basis) in Uttar Pradesh to be around Rs 13,000 crore, while the non-subsidized fertilizer market is slightly above Rs 1,000 crore. Companies working in this segment may face a setback.
Concerns over farmer choice and innovation
A senior official of a fertilizer company told rural voice Such a complete ban may not be in the interest of farmers. Both government and industry are promoting balanced nutrient use and alternatives to conventional chemical fertilizers to improve soil health and encourage the adoption of non-chemical inputs.
Specialty fertilizers, including soluble and micronutrient products, meet specific crop requirements. Industry representatives argue that restricting their sale could deprive farmers of crop-specific solutions and discourage investment in new generation fertilizers designed for targeted nutrient management.
Throughout India, the specialty fertilizer market is estimated at approximately four lakh tonnes. Companies fear that tighter controls in a big agricultural state like Uttar Pradesh could have a cascading effect on innovation and crop productivity.
Industry voices say it is necessary to stop unfair trade practices, but further tightening of controls in an already regulated sector could ultimately harm both companies and farmers.
