The nearly fully regulated fertilizer industry has been left stunned by a recent decision of the Government of Uttar Pradesh. In a government order issued on January 9, 2026, the state banned the sale of non-subsidised fertilizers in Uttar Pradesh by companies and distributors authorized to sell subsidised fertilizers. The ban has been made effective retrospectively from January 1, 2026.
The order, issued by the Fertilizer Section of the Directorate of Agriculture, Uttar Pradesh, states that except for the permission granted to supply and sell subsidised fertilizers, all non-subsidised fertilizers mentioned in the fertilizer sale authorisation letters stand prohibited in the state from January 1.
Letters conveying this decision were sent on January 13 to major fertilizer manufacturers and marketing companies. These include cooperative giants Indian Farmers Fertiliser Cooperative Limited and Krishak Bharati Cooperative Limited, as well as Indian Potash Limited, Hindustan Urvarak & Rasayan Limited, National Fertilizers Limited, Yara Fertilizers India Pvt Ltd, Chambal Fertilisers 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 Fertilisers and Chemicals and Narmada Bio-Chem Limited, among others. A copy of the letter is available with Rural Voice.
Reason Behind the Ban
The state government cited complaints that subsidised fertilizers were being “tagged” with other fertilizers, compelling farmers to purchase additional non-subsidised products. The order mentions meetings held with industry representatives on the issue. After complaints continued, the government decided to impose a complete prohibition on the supply and sale of non-subsidised fertilizers by such entities.
A Highly Regulated Sector
Industry sources describe fertilizers as one of the most tightly regulated sectors in India. The sale and pricing of urea are fully 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 widely sold decontrolled fertilizer, di-ammonium phosphate (DAP) has been fixed at Rs 1,350 per 50 kg bag since 2022. The government determines subsidy levels to maintain this price stability.
Apart from DAP, more than 30 complex fertilizers, including various NPK grades, fall under the NBS regime. While companies are technically free to set their prices, these are indirectly influenced by government subsidies and subject to several conditions.
Market Size and Impact
India’s total annual fertilizer sales are estimated at around 670 lakh tonnes. Urea accounts for nearly 400 lakh tonnes, while DAP contributes around 100 lakh tonnes.
For subsidised fertilizers, the central government issues indents under the Fertilizer Control Order based on demand projections from the Ministry of Agriculture and monitors their movement and sale. Dispatches, state-wise and district-wise allocations of both imported and domestically produced subsidised fertilizers are closely supervised.
The Uttar Pradesh government’s decision does not affect subsidised fertilizers but directly impacts specialty and other non-subsidised fertilizers. Industry sources estimate that subsidised fertilizer sales in Uttar Pradesh are worth (based on MRP) around Rs 13,000 crore, while the non-subsidised fertilizer market is slightly above Rs 1,000 crore. Companies operating in this segment are likely to face a setback.
Concerns Over Farmer Choice and Innovation
A senior executive of a fertilizer company told Rural Voice that such a blanket ban may not be in farmers’ interest. Both the government and industry have been 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, cater to 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.
Across India, the specialty fertilizer market is estimated at around four lakh tonnes. Companies fear that tighter controls in a large agricultural state like Uttar Pradesh could have wider implications for innovation and crop productivity.
Industry voices maintain that while preventing unfair trade practices is necessary, further tightening of controls in an already regulated sector may ultimately hurt both companies and farmers.