In India, the indigenous manufactured / imported urea fertiliser is only sold to the dealers and retailers having license (Fertilizer Registration Certificate) issued by the respective State Government. Accordingly, urea fertiliser manufactures / importers appoint dealers in various states of their market area and enter into legally binding dealership agreements with such licensed dealers. Sales of urea fertilizers to the end user (farmers) is captured through POS (Point of Sales) machine and integrated with the Government of India owned iFMS system.
The manufacture / importer has to invoice for such sales to their dealers as per Maximum Retail Price (MRP) plus Statutory Taxes & Duties as notified by the GOI from time to time. In order to provide urea to the farmers at affordable prices the MRP is fixed by Government of India, at much lower rate than as compared to the cost of production. The GOI bears the difference between applicable price of urea to the manufacturer / importer and the MRP, which is called subsidy on fertilizers under GOI’s budgetary allocation.