Fertiliser industry may soon see an end to inspector raj

The government is drafting changes to streamline approvals, decriminalise minor breaches and rationalise penalties in the fertiliser industry, officials familiar with the matter said, as it moves to ease rules in one of the most tightly regulated sectors.

At a February 9 meeting with industry representatives, the government sought inputs on compliance bottlenecks, legal hurdles and other constraints that they face and on how such issues could be fixed, officials and industry executives said. "Fertiliser is one of the most inspector-infested sectors till date in India," said Rajib Chakraborty, president of the Soluble Fertilizer Industry Association of India. This prohibits innovation, he said.

A politically and strategically important sector where the government spent ₹1.9 lakh crore in subsidies last fiscal year, fertiliser is regulated under the Essential Commodities Act with state control over manufacturing, imports, pricing and distribution, a regime industry executives say has stifled innovation and distorted usage patterns.


"The government is looking at aligning fertiliser policies with its proposed Jan Vishwas Siddhant," said a senior industry executive who attended the meeting earlier this month. The proposed Jan Vishwas Siddhant is a regulatory framework recommended by a high-level committee led by the Niti Aayog. It endorses scrapping licences, permits and no-objection certificates, ending 'inspector raj' and shifting routine inspections to accredited third parties.

In India, the fertiliser sector is dominated by a heavily subsidised regime, primarily covering urea and phosphate & potassic (P&K) fertilisers that are sold at controlled, low prices under the nutrient-based subsidy scheme.

For 'decontrolled' fertilisers such as muriate of potash (MOP) and complexes containing nitrogen (N), phosphorus (P), potassium (K) and sulphur (S), companies must ensure that maximum retail prices are maintained in accordance with the notified subsidy rates. Non-subsidised or 'specialty' fertilisers -calcium nitrate and water-soluble fertilisers-are sold at market-driven rates.

Fertiliser, whether subsidised or non-subsidised, is regulated by the 1985 Fertiliser Control Order issued under the Essential Commodities Act, which gives sweeping powers to a wide range of government officials from district collectors to zilla parishads and gram sewaks to conduct raids, seize goods and arrest manufacturers for even minor deviations. "In addition to everything else, every district, tehsil can come up with their own rules and we have to follow it," said a senior executive of a listed fertiliser firm. Subsidy policies have encouraged excessive application of certain nutrients, eroding soil health while swelling the fiscal burden.

Industry executives also raised the issue of delays they face in the product registration process.

India takes more than 800 days to register a new soil nutrient product, among the longest timelines globally, according to a World Bank report.