Department of Fertilisers (DOF), Ministry of Chemicals & Fertilisers, controls Sales and Movement of Urea in India, under The Fertilizer (Control) Order, 1985 (FCO).
Section III Clause 6 of FCO clearly says that “the central government (GOI) may, with a view to securing equitable distribution and availability of fertilisers to the farmers in time, by notification in the Official Gazette, direct any manufacturer / importer to sell the fertilisers produced by him in such quantities and in such state or states and within such period as may be specified in the said notification”.
The Department of Fertilisers (DOF) monitor andcontrol of Urea Fertilisers, right from production, dispatch / movement and up to the sale to the farmers, through a government owned mFMS / iFMS apps / computerized online systems. This is a continuous process involving DOF, Department of Agriculture & Cooperation of respective State Government etc, to ensure and meet the above objective within the ambit of FCO.
The sale and distribution is channelized through existing well-established government registered supply chain network (Registered Dealers, Retailers & Warehouses) in India through various policies and notifications by The Department of Fertilisers (DOF) in consultations with the state governments. No one is authorised to store / sell fertilisers without Fertiliser License (Fertiliser Registration Certificate).
However 100% sales of production of all urea units are secured through DOF ECA allocation and movement system and no separate off-take agreement is required / applicable to any urea manufacturing units / companies in Indian market.
ECA Allocation & Movement System / Procedures in India
The Department of Fertilisers (DOF) advise all State Governments to assess the requirement of fertiliser in their state – agriculture season wise (Kharif and Rabi). The State Government collects the full data on micro level i.e. block & district level, according to their cropping patterns and cropped area targets and a consolidated demand is put before the DOF. The DOF also collects the production plan of each & every urea manufacturing units and compiles the total indigenous / domestic urea production data on annual, season and monthly basis. The DOF, based on total production and total estimated demand, determines the shortfall between the requirement and availability and estimates the urea to be imported every year.
The DOF also organises Zonal Conference twice a year for Kharif (April to September) in the month of Feb / March and for Rabi (October to March) in the month of August / September. Based on the state wise urea plan proposed by companies / data collected, the Department of Fertilisers makes zone wise state wise company wise ECA (Essential Commodity Act) allocation of urea fertiliser to be produced / dispatched by the indigenous urea manufacturer. The entire allocation process is completed well before the commencement of each agriculture season.
The Department of Fertilisers (DOF) gives ECA allocation for 50% of production projected by the individual urea manufacturing units / companies for the agriculture seasons. For the remaining 50% of production (Non-ECA quantum), Department of Fertilisers gives choice to the producer to propose their distribution plan within their marketing area on a monthly basis. The DOF reviews the producers’ proposed distribution plan of Non-ECA quantity, on monthly basis, and based on demand & availability situation, the DOF approves and issues a Movement Supply Plan (Company wise, State-wise & District-wise Company wise). The fertiliser companies are required to ensure the supply of fertiliser to allocated state / district in a timely manner.
In essence, Govt. of India through The Department of Fertilisers (DOF), ensures that fertiliser is made available across the country and throughout the year to ensure that there is no shortage / surplus urea available in a particular market. Government also ensures that all the products manufactured / imports by indigenous manufacturers / importers is sold in Indian markets through ECA allocation and movement systems and becomes eligible for subsidy reimbursement.