Chandigarh: A parliamentary standing committee has raised concerns over the alleged diversion of subsidised neem-coated urea from agricultural use to industrial units in Punjab. The committee has called for stronger monitoring to ensure that subsidised fertiliser reaches farmers and is not misused for commercial purposes.
The observations form part of the 2025-26 report of the Standing Committee on Chemicals and Fertilizers. The report examines the implementation of the Fertilizer (Movement Control) Order, 1973.
Subsidised Urea Diverted to Industrial Use
The committee noted that subsidised neem-coated urea, which the government supplies to farmers at regulated prices, was allegedly being diverted to industries.
Reported cases involved units engaged in plywood and resin manufacturing, diesel exhaust fluid (DEF) production and cattle-feed manufacturing. Punjab was among the states where such diversion came under scrutiny. Rajasthan, Uttar Pradesh, Gujarat and Karnataka also reported cases.
Agricultural-grade urea carries a government subsidy and is intended for farm use. Technical-grade urea serves industrial applications and does not receive the same agricultural subsidy.
The price difference creates an incentive for illegal diversion. Recent investigations in Punjab found instances where subsidised agricultural urea was allegedly supplied in place of technical-grade urea.
Punjab Cases Raise Further Concerns
Authorities in Punjab have already taken action in connection with suspected urea diversion.
In June, the state government chargesheeted seven officials and transferred another official after inspections found suspected irregularities involving agricultural-grade urea and technical-grade fertiliser at cooperative cattle-feed plants.
Investigators also found suspected diversion at a Milkfed cattle-feed plant in Khanna. Agriculture officials recovered 1,340 bags labelled as technical-grade urea. Laboratory testing later indicated that the material contained subsidised agricultural-grade neem-coated urea.
Police subsequently registered a case against plant officials and private firms in connection with the alleged diversion. An SIT was also formed to investigate the matter.
Panel Seeks Stronger Monitoring
The parliamentary panel has called for tighter controls to prevent subsidised fertiliser from entering industrial supply chains.
It has recommended measures such as dedicated monitoring, registration of industrial users and data-driven surveillance. Such measures could help authorities track fertiliser movement and identify unusual supply patterns.
The Centre already uses digital systems to monitor fertiliser sales. Aadhaar-linked Point of Sale devices authenticate beneficiaries, while the Direct Benefit Transfer system links subsidy payments to actual fertiliser sales.
The latest recommendations highlight the need for stronger enforcement at the state and distribution levels. Better tracking could help protect government subsidies and ensure that subsidised urea remains available to the farmers for whom it is intended.