Exploring the Fertilizer Act, 1985 and Its Impact on Agriculture

India’s farmers depend on fertilizers as one of their most critical agricultural inputs. But what happens when those fertilizers are substandard, overpriced, or diverted to non-agricultural uses? Crop yields suffer, soil health declines, and farmers face crippling input costs. To address exactly these risks, the Indian government enacted the Fertilizer (Control) Order, 1985 (FCO) – a comprehensive legal framework governing the production, distribution, pricing, and quality of fertilizers across the country. Issued under the Essential Commodities Act, 1955, the FCO remains one of the most important pieces of agricultural legislation protecting Indian farmers and the nation’s food security.

Why fertilizer regulation was needed 🔗

India is the second largest producer and consumer of fertilizers globally, after China. Agriculture contributes around 18% to India’s GDP, and fertilizers – particularly the key macronutrients nitrogen (N), phosphorus (P), and potassium (K) – are essential for maintaining soil fertility and achieving consistent crop yields. Without structured regulation, the fertilizer supply chain is vulnerable to serious problems: adulteration with cheap fillers, black marketing during peak sowing seasons, sale of substandard products that degrade soil health, and price exploitation that hits small and marginal farmers hardest.

Fertilizer regulation in India did not begin in 1985. The first Fertilizer Control Order was introduced in 1957, laying down preliminary guidelines for quality and distribution. As the agricultural sector expanded rapidly – especially during and after the Green Revolution – a more detailed regulatory framework became necessary. The growing reliance on chemical fertilizers, combined with increasing reports of malpractice, led to the enactment of the current FCO in 1985.

Legal foundation: the Essential Commodities Act, 1955 🔗

The FCO draws its authority from Section 3 of the Essential Commodities Act (ECA), 1955, which empowers the central government to regulate the production, supply, and distribution of essential commodities. By declaring fertilizers an essential commodity, the government ensures stringent oversight to prevent hoarding, black marketing, and the sale of substandard products. Violations of the FCO are therefore prosecutable under the ECA, which carries serious penalties including fines, seizure of goods, and imprisonment.

Fertilizer regulation also intersects with Entry 52 of the Union List (industries) and Entry 33 of the Concurrent List (trade and commerce), placing it under dual jurisdiction. The central government sets national standards through the FCO, while state governments are responsible for on-ground enforcement via designated Fertilizer Inspectors and state-level testing laboratories.

Key provisions of the Fertilizer (Control) Order, 1985 🔗

The FCO provides a detailed legal and procedural framework covering several critical areas of the fertilizer industry. Understanding these provisions helps both agripreneurs and farmers know their rights and responsibilities in the fertilizer supply chain.

Licensing and registration 🔗

One of the FCO’s most fundamental requirements is that every manufacturer, importer, and dealer involved in the production or sale of fertilizers must obtain a license or certificate of registration. No person can offer fertilizers for sale or carry on the business of selling fertilizers except under and in accordance with the terms and conditions of a certificate of registration granted under the Order. This requirement ensures that only authorized and qualified entities participate in the fertilizer trade, significantly reducing the risk of substandard or counterfeit products entering the market.

The licensing system requires extensive documentation that creates a paper trail for accountability. Manufacturers must maintain detailed records of raw material sources, production processes, quality testing results, and distribution patterns. Dealers must keep sales records, inventory logs, and customer complaint registers. Dealers are also legally obligated to sell fertilizers at the prescribed Maximum Retail Price (MRP) and may not charge more without facing legal action.

Quality control and standards 🔗

The FCO establishes that all fertilizers sold in India must conform to prescribed quality specifications. Each fertilizer must contain a minimum nutrient content – such as nitrogen, phosphorus, and potassium – as specified in the schedules of the Order. The FCO categorizes fertilizers into straight fertilizers, complex fertilizers, bio-fertilizers, and organic fertilizers. Each category must comply with specific standards that are periodically updated to reflect advances in agricultural science.

Authorized Fertilizer Inspectors have the power to inspect manufacturing premises, collect samples from dealers and manufacturers, and initiate legal action against violators. Samples are analyzed at the Central Fertilizer Quality Control and Training Institute, Faridabad, or at Regional Fertilizer Control Laboratories. Every manufacturer is also required to maintain minimum in-house laboratory facilities to self-monitor product quality before market release.

Clause 19 of the FCO explicitly prohibits the manufacture or sale of non-standard fertilizers. When inspectors detect substandard stock, they can issue a stop-sale notice and initiate action within 21 days. Seized fertilizers are handled under the provisions of Sections 6-A through 6-E of the Essential Commodities Act, which govern custody, disposal, and confiscation.

Pricing regulation 🔗

Price control is central to the FCO’s mandate of protecting farmers. The government uses the FCO framework to regulate the prices of key fertilizers to prevent exploitation and ensure affordability for smallholder farmers. Urea, India’s most widely consumed fertilizer, is classified as a controlled commodity with a government-fixed MRP. The price of a 45 kg bag of urea has remained at ₹242 per bag (exclusive of neem coating charges and applicable taxes) since March 2018, reflecting the government’s commitment to keeping this critical input affordable.

Adulteration prevention and penalties 🔗

The FCO includes specific provisions to prevent fertilizer adulteration, which can have severe consequences for crop health, soil biology, and farmer livelihoods. Selling fertilizers at unapproved prices, selling substandard fertilizers, or failing to comply with licensing requirements can result in legal action. Those found guilty may face fines, imprisonment, and seizure of goods under the ECA. In serious cases involving deliberate fraud, violators can also face criminal prosecution under the Indian Penal Code. Repeated or severe violations can lead to permanent license cancellation – effectively ending a business’s ability to operate in the fertilizer sector.

Packaging rules add another layer of protection. Every fertilizer container must be packed and sealed so that contents cannot be tampered with without a visible break in the seal or stitching. Bags manufactured in India must bear lead seals where stitched by hand, preventing tampering before the product reaches the farmer.

The Nutrient Based Subsidy (NBS) policy 🔗

While the FCO provides the legal backbone for fertilizer regulation, the government has introduced targeted subsidy policies to improve the efficiency and balance of fertilizer use. One of the most significant is the Nutrient Based Subsidy (NBS) scheme, implemented with effect from 1 April 2010 by the Department of Fertilizers under the Ministry of Chemicals and Fertilizers.

Before NBS, subsidies were product-based – a fixed amount was given per bag of fertilizer regardless of its actual nutrient content. This created distortions in the market. The NBS policy replaced this with a nutrient-based approach: a fixed subsidy per kilogram of actual nutrient content – nitrogen (N), phosphorus (P), potassium (K), and sulphur (S) – is provided on 28 grades of Phosphatic and Potassic (P&K) fertilizers. The subsidy is paid to manufacturers and importers, who are then expected to keep retail prices at reasonable levels. Urea remains excluded from NBS and continues under a separate price control mechanism.

The NBS scheme has delivered measurable outcomes. Foodgrain yields increased from 1,930 kg per hectare in 2010-11 to 2,578 kg per hectare in 2024-25, and domestic production of DAP and NPKS fertilizers grew by over 50% between 2014 and 2025. The scheme also promotes healthier soil by encouraging balanced use of N, P, K, and S, and discourages over-reliance on any single fertilizer type.

However, the NBS policy has its limitations. Because urea is excluded and kept at a very low fixed price, farmers tend to over-apply urea while underusing P&K fertilizers, leading to an imbalanced NPK ratio in the soil. The ideal soil application ratio is N:P:K = 4:2:1, but India’s actual consumption ratio remains heavily skewed toward nitrogen – a persistent challenge that policymakers continue to address.

The Neem Coated Urea policy 🔗

Another important policy intervention within the FCO framework is the Neem Coated Urea (NCU) policy. Heavily subsidized urea had long been diverted from agricultural use to industries like plywood manufacturing and animal feed production, creating artificial shortages during critical sowing seasons and costing the exchequer significantly. The government’s response was to mandate neem coating on all subsidized urea.

The transition happened in stages. Neem coating was initially permitted at 20% of total production in 2008, raised to 35% in 2011, then made mandatory at 75% in March 2015 before 100% neem coating became compulsory for all indigenous and imported urea from May and September 2015 respectively. Neem oil, a naturally derived bio-based material, acts as a nitrification inhibitor – it slows the conversion of ammoniacal nitrogen into nitrate in the soil, making more nitrogen available to crops over a longer period and reducing losses through leaching, runoff, and volatilization.

The results have been significant. NCU requires less quantity per unit area compared to normal urea while delivering higher crop yields, and because neem coating makes urea unsuitable for industrial applications, diversion to non-agricultural uses has been sharply reduced. Neem coating helped the government save an estimated ₹10,000 crores by preventing urea diversion and misuse of subsidised inputs. Farmers across major crops including paddy, wheat, maize, and sugarcane have reported reduced input costs, improved productivity, and better soil health following NCU adoption.

Challenges and the road ahead 🔗

Despite its comprehensive framework, fertilizer regulation in India still faces persistent challenges. Limited testing infrastructure and bureaucratic delays continue to hinder swift action against non-compliant products. Subsidy leakages – such as diversion of subsidized fertilizers for industrial use – deprive farmers of affordable inputs. The imbalance in NPK usage, driven largely by urea’s disproportionately low price, also remains an unresolved concern for long-term soil health.

Digital tools are being deployed to address some of these gaps. The Fertilizer Monitoring System (FMS) enables real-time tracking of fertilizer movement through the supply chain, while the mFMS app provides farmers with price and availability data at the point of sale. These technologies enhance transparency and help curb black-market activities. Looking ahead, experts recommend strengthening regional testing laboratories, using blockchain for subsidy tracking, and gradually aligning fertilizer policy with India’s National Mission on Natural Farming to phase in more sustainable alternatives without disrupting food production.

Judicial decisions have also shaped how the FCO is interpreted and enforced. In State of Haryana v. Jaswinder Singh (2014), the Punjab & Haryana High Court upheld strict penalties for adulterated fertilizers, reinforcing that substandard products are not just a commercial violation but a direct threat to farmer livelihoods and national food security – a principle that continues to guide enforcement today.

What do you think? With India’s soil health increasingly strained by nutrient imbalances, do you think excluding urea from the Nutrient Based Subsidy scheme is a policy gap that needs urgent correction? And as an agripreneur, how would you navigate fertilizer compliance requirements under the FCO while keeping your input costs competitive?

References

1. https://www.indiacode.nic.in/handle/123456789/1870
2. https://bhattandjoshiassociates.com/regulation-of-fertilizers-under-the-fertilizer-control-order-fco-legal-framework-challenges-and-judicial-insights/
3. https://bhattandjoshiassociates.com/fertilizer-control-order-legal-framework-policy-context-and-judicial-interpretations-in-indian-agriculture/
4. https://evs.institute/environmental-legislations/fertilizer-control-order-1985-quality-pricing/
5. https://www.latestlaws.com/bare-acts/central-acts-rules/consumer-laws/the-essential-commodities-act-1955/fertilizer-control-order-1985/
6. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2112304
7. https://www.taxtmi.com/tmi_blog_details?id=813300
8. https://www.fert.nic.in/phosphatic-and-potassic-pk-policy
9. https://www.shankariasparliament.com/current-affairs/nutrient-based-subsidy-nbs-scheme
10. https://www.clearias.com/nutrient-based-subsidy-scheme/
11. https://pib.gov.in/newsite/printrelease.aspx?relid=159903
12. https://www.nature.com/articles/s41598-022-12708-1
13. https://www.narendramodi.in/mobile/neem-coated-urea-a-process-reform-that-transformed-indian-agriculture