By: ICN Bureau
Last updated : May 27, 2025 10:57 am
Indian startups are required to obtain multiple licenses, maintain offices, and establish warehouses in every state where the fertilizer is to be distributed through the tender inviting public sector companies
A major public sector enterprise recently floated multiple tenders for the supply of "Soluble Fertilizer," explicitly excluding "Made in India" products from participation. Whether through the Government e-Marketplace (GeM) or direct tender invitations, many public sector companies are increasingly bypassing Indian manufacturers by manipulating MSME and “Make In India” procurement norms.
Their rationale lies in regulatory hurdles: Indian startups are required to obtain multiple licenses, maintain offices, and establish warehouses in every state where the fertilizer is to be distributed through the tender inviting public sector companies.
In contrast, importing from Chinese suppliers or their foreign agents involves minimal compliance—no licenses are required for the supplier, and the importer only needs to complete a basic formality of adding the source. This can be done simply by submitting a scanned letter, enabling the importer to sell across all operational states without further regulatory burden of FCO.
The Fertilizer Control Order (FCO) was established under the Essential Commodities Act, 1955 (Act No. 10 of 1955), as a regulatory framework aimed at ensuring the quality of fertilizers and monitoring their movement, particularly for the effective distribution of subsidies. It played a crucial role during a period when India had limited domestic fertilizer production capacity and was heavily reliant on imports. Over the years, the FCO significantly contributed to regulating the fertilizer sector and facilitating fertilizer movement control to meet national agricultural demands.
Over the years, the concurrent nature of the Fertilizer Control Order—governed by both central and state authorities—has led to numerous amendments. However, it has struggled to keep pace with evolving domestic needs and global developments. Gradually, the framework has come to be seen as a relic of the legacy "Inspector Raj", "License Raj”, often proving counterproductive to the sector's growth and efficiency.
Although these restrictive policies apply to all non-subsidized fertilizers, soluble fertilizers stand out as a prime example. Unlike sectors such as electronics, pharma and defence, where the central government’s “Import Substitution” and “Make in India” initiatives have gained significant traction, the fertilizer sector—particularly soluble fertilizers—has seen little progress. Soluble fertilizers are critical to the growth of horticulture, and achieving self-reliance in this segment is essential.
However, grassroots innovation in manufacturing these vital compounds continues to struggle due to a lack of market access, constrained by the outdated and rigid provisions of the Fertilizer Control Order (FCO). The high cost of setting up offices, warehouses, and securing licenses in each state—combined with the need for market partners to duplicate these efforts—erodes any competitive edge Indian manufacturers might have.
In contrast, Chinese manufacturers face virtually no such regulatory obligations when supplying to the Indian market. This disparity creates an uneven playing field, fundamentally undermining the spirit and objectives of the "Make in India" initiative.
“India’s production of 112.62 million metric tons of fruits and vegetables relies heavily on 5 lakh tons of imported, non-subsidized fertilizers, often subject to shortages and price hikes. While the Central Government’s 'Import Substitution' efforts are making headway at the grassroots, outdated regulatory policies are stifling entrepreneurship. A single manufacturing unit is monitored by as minimum as 32 FCO inspectors, leading to excessive scrutiny and harassment under the guise of regulation. This overregulation deters startup growth and pushes India further into import dependence, instead of nurturing domestic innovation," says Dr. Suhash Buddhe, Mentor at IIM Nagpur Incubation Cell.
Jayantibhai Kumbhani, President, CAIP (Chamber For Agri Input Protection, Ahmedabad), highlights the disproportionate regulatory burden under the Fertilizer Control Order (FCO), noting that no other industry, including pharmaceuticals, faces such an intense level of inspector oversight. In some cases, a single district can have many inspectors monitoring one fertilizer unit, creating undue pressure on Indian entrepreneurs. He emphasizes the urgent need for FCO reforms to foster self-reliance in the non-subsidized fertilizer sector, which holds the potential to reduce overall subsidy burdens and advance the goals of Atmanirbhar Bharat. This view is echoed by Vijay Thakur, President, grassroots agri-entrepreneur association OAMA, Maharashtra who shares similar concerns and advocates for urgent policy intervention.
“A practical path forward includes implementing “One Nation, One License,” ensuring parity with foreign manufacturers by allowing marketers to add sourcing in one state and market across all operational states for Indian sources, capping inspector numbers to two per unit, and ultimately enacting a new law for non-subsidized fertilizers outside the Essential Commodities Act to realise the vision of Atmanirbhar Bharat,” adds Vinod Goyal, National Secretary, SFIA.