Neem Coated Urea (NCU) and the reality

neem urea

The prime minister quoted in the parliament “the decision of neem-coated urea has helped the farmers of India”no doubt without any statistical or general explanation. This was not the first time Mr. Prime Minister quoted something without documentary evidences either from governmental side, think-tank or civil society side. Let alone from the farmer’s side, who is the last one to know the benefits of the policy or scheme.

Neem Coated Urea was developed by National Fertilizers Limited (NFL) back in 2002.  Since then National Fertilizers Limited standardized the techniques for production of Neem Coated Urea at its Panipat Unit. In 2008, the ministry allowed production (not mandatory) of NCU up to 20 per cent. In January 2010, the ministry increased this to 35 per cent. And in March 2015, the NDA government made it mandatory for domestic manufacturers to produce 75 per cent NCU, which was further extended to 100 per cent on May 25, 2015. Modi Sarkar is repeatedly claiming that the NCU is its own initiative. But it was there, well over 13 back in time, before it was made mandatory in the urea production. The year wise production of NCU in metric ton is available before it was made mandatory in 2015.

Year Total Production (In MT)
2003-04 73717
2004-05 224242
2005-06 488095
2006-07 315263
2007-08 102769
2008-09 11914
2009-10 37648
2010-11 120066
2011-12 639568
2012-13 1083119
2013-14 1263465
2014-15 1365305
2015-16 3270199

According to the reply in Lok Sabha on August 28, 2017, NCU is a fertiliser that increases soil fertility due to the large amounts of nitrogen it contains–improved soil health, cut costs of plant protection chemicals and raised yields by 6-17% for various crops. The country produces average 25 million tonnes of urea as against the demand for about 32 MT in the current year. The gap is met through imports. However, Modi Sarkar is claiming that the use of urea has dropped drastically and production of food grain has increased from 252 million tonnes to 277.58 million tonnes in 2017. But the demand of urea in 2017 says otherwise.

Year Urea (Thousand tonnes)
2013-14 31192
2014-15 32029
2015-16 32858
2016-17 33677
2017-18 33754

However, the Government submitted in Lok Sabha that “during the last three years i.e. 2014-15, 2015-16 and 2016-17, the consumption (Kg/hectare) showing a declining trend – 152.53, 149.61 and 140.84 (estimated) respectively. This may be due to Neem coating of Urea which increases efficacy due to slow release of Nitrogen”. The governemnt on differet occasion also submitted that the total urea consumption has dropped in India from 306.10 million tonnes in 2014-15 to 296.14 million tonnes in 2016-17, the table showing total consuption in three finacial years.

Year Urea Consumption (LMT)
2014-15 306.10
2015-16 306.35
2016-17 (NCU Consumption) 296.14

 Neem-coating can partially help arrest its use for non-agricultural purposes but not its smuggling to other countries for agricultural purposes. Subsidised price on sale of urea to farmers, chemical industries in India and neighbouring countries of Bangladesh, Nepal, Sri Lanka have a strong incentive. And, this is happening on a large scale. The diversion is estimated to be 30-40% of the total consumption of urea i.e. 29 million tonnes in 2016-17.


Year Urea Subsidy

(Rs. In Crores)

2014-15 50,424
2015-16 50477.61
2016-17 47469.51
2017-18 42,748(RE)
2018-19 44989 (BE)

The biggest worry for any government is to manage financial deficit year-by-year. And, Fertilizer subsidy takes one of the biggest tolls on the government’s expenditure. In 2014-15, the subsidy for urea was 50,424 crores, but in 2015 the slight increase was reported as expected every year. However, the drop of almost 3000 crore in 2016-17 and drop of almost 5000 crores in 2017-18 in revised estimates is a good sign for the government’s claim.

With 100% neem coating of urea, the government has now asked fertiliser manufacturers to provide 45kg bags in place of 50kg. Most farmers use fertilisers by an estimate in terms of bags and not the actual volume. Providing urea in 45kg bags will straight away bring down the consumption of urea by almost 10%, which can be one of the reasons for the big drop in the demand of urea in last couple of years.

However, Neem-coated urea is being used in India since 2002. Only 100% production policy was adopted by Modi Government in 2015, which defuse Modi Sarkar’s indirect claim on NCU.  Neem-coating makes it costlier for black marketers to divert urea to industrial consumers. But it cannot prevent smuggling of subsidised fertilisers in other countries. Prime Minister’s remark on Neem coating urea is baseless wild claim.  It might have effectively substituted the standard urea, but there are no studies or reports of direct benefits from Neem coated urea.

Nilesh Jain is a researcher at Swaraj Abhiyan and is also pursuing Master of Laws at Delhi University.


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