Forecast Period | 2026-2030 |
Market Size, By Volume (2024) | 278.34 Lakh Metric Tonnes |
CAGR (2025-2030) | 4.03% |
Fastest Growing Segment | Horticulture Crops |
Largest Market | West India |
Market Size, By Volume (2030) | 348.77 Lakh Metric Tonnes |
Market Overview
India Neem Coated Urea Market achieved the total volume of 278.34 Lakh Metric Tonnes
in 2024 and is expected to reach 348.77 Lakh Metric Tonnes by
2030 with a CAGR of 4.03% during the forecast
period. Neem-coated urea is a slow-release
fertilizer that integrates urea with neem oil or neem cake. This coating
regulates the nitrogen release from the urea, ensuring a more gradual
availability to plants over an extended period. This controlled release enhances
nutrient uptake and minimizes the risk of nitrogen leaching into groundwater.
Neem oil, a fully organic substance, effectively slows nitrogen release,
improving nutrient use efficiency, reducing soil and water contamination, and
decreasing the potential for agricultural-grade urea being diverted for
non-agricultural uses.
In India, using organic neem as a
coating has proven more beneficial than chemical inhibitors. In 2015, the
Indian government mandated 100% neem coating on all subsidized
agricultural-grade urea to boost nutrient efficiency, crop yield, soil health,
and prevent the misuse of urea. The government’s promotion of neem-coated urea
aims to reduce reliance on chemical fertilizers and lessen environmental
impact, with policies including subsidies and mandatory adoption in certain
regions.
The rising awareness of sustainable
farming and environmental protection has driven increased demand for
neem-coated urea. Its adoption varies by region, with greater use in areas with
strong government support and environmental regulations. Regions with intensive
agriculture and soil health issues show higher demand. The neem-coated urea
market is expected to grow, supported by ongoing government policies and the
adoption of sustainable agricultural practices. Advances in technology and
production processes are likely to lower costs and make neem-coated urea more
accessible to a wider range of farmers. Neem-coated urea is becoming a
significant segment in India's fertilizer market, reflecting the country's
broader commitment to sustainable agriculture.
Key Market Drivers
Government Policies and
Initiatives
The
Indian government offers subsidies for neem-coated urea, making it more
affordable for farmers compared to traditional fertilizers. This financial
support reduces the cost barrier and promotes broader adoption. Additionally,
subsidies for manufacturers help lower production costs, which in turn
decreases the retail price of neem-coated urea.
In
2023, the Cabinet Committee on Economic Affairs (CCEA) approved several
fertilizer schemes, including the Prime Minister's PRANAM scheme, the urea
scheme, and the organic manure scheme, with a total allocation of USD 44.26 Billion. The
extended urea subsidy scheme, effective until March 2025, ensures that farmers
can purchase urea at a subsidized price of USD 2.89 per 45 kg bag, despite the
actual cost being around USD 26.32 per bag. This scheme, costing USD 44.02 Billion,
will be fully funded by the Central government.
The
government has mandated neem coating on all subsidized agricultural-grade urea,
ensuring that a significant portion of urea in the market is neem-coated. This
regulation drives widespread adoption by setting standards that neem-coated
urea meets more effectively than conventional urea. The Finance Minister’s
Union Budget for FY24 allocated approximately USD 20.93 Billion towards
fertilizer subsidies, supporting initiatives that aim to reduce
agriculture’s environmental impact, such as minimizing nitrogen runoff and
improving soil health.
Training
and awareness programs conducted by the government and agricultural
institutions educate farmers about the benefits of neem-coated urea, driving
its adoption through increased knowledge. Additionally, government support for
research and development in fertilizer technology enhances the effectiveness
and affordability of neem-coated urea, fostering market growth. Policies like
the Nutrient-Based Subsidy (NBS) regime that encourage organic farming
practices indirectly increase demand for neem-coated urea, aligning with the
broader trend of adopting eco-friendly agricultural practices.
These
government policies and initiatives are crucial in shaping the neem-coated urea
market by improving its accessibility, affordability, and appeal to farmers,
while aligning with broader environmental and agricultural objectives.
Increased Nutrient Use
Efficiency
Neem-coated
urea utilizes a slow-release mechanism that extends the availability of
nitrogen to plants, allowing for gradual nutrient absorption and reducing the
frequency of applications. The neem coating slows the nitrification process of
urea, enhancing nutrient absorption in the soil and minimizing groundwater
pollution. By inhibiting nitrifying bacteria that convert ammonical nitrogen
into nitrate nitrogen (which is highly soluble and prone to leaching),
neem-coated urea prevents nitrate loss.
During
manufacturing, transportation, and handling, urea often forms powder, which can
be blown away by wind and lead to wastage. The neem coating reduces friction
among urea prills, minimizing powder formation and increasing nitrogen use
efficiency (NUE). Neem-coated urea has been shown to improve NUE significantly,
particularly in crops like paddy and wheat, where NUE typically ranges from 30%
to 50%. The neem oil coating also prevents urea from caking and reduces
powder formation during handling.
Neem-coated
urea repels insect pests and wild animals, further protecting crops. By
ensuring a consistent nitrogen supply, neem-coated urea promotes steady plant
growth and enhances crop yields, benefiting farmers who aim to maximize
productivity. The increased nutrient efficiency means that farmers achieve
better results with less fertilizer, leading to cost savings. Additionally, the
reduced nutrient loss and minimized need for extra applications lower
environmental costs, such as soil and water pollution.
The
slow-release feature of neem-coated urea aligns with sustainable farming
practices by reducing environmental impact. Its efficiency in nutrient use
supports broader goals of decreasing agricultural runoff and pollution. As
farmers experience the benefits of improved nutrient efficiency, the demand for
neem-coated urea increases. The growing preference for high-performance
agricultural inputs that offer better returns on investment further drives the
adoption of neem-coated urea, enhancing its market appeal and acceptance among
farmers.
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Key Market Challenges
Use of Subsidized Urea by
Industries
The
diversion of subsidized urea to industrial uses, rather than its intended
agricultural applications, presents a major challenge for the neem-coated urea
market in India. Intended to support agricultural productivity, subsidized urea
is sometimes redirected to industries such as chemicals, pharmaceuticals, and
plastics. This misallocation decreases the availability of urea for farmers, thereby
impacting agricultural output. The redirection of subsidized urea undermines
the effectiveness of subsidy programs and can lead to higher costs for farmers,
who may face shortages or be forced to buy neem-coated urea at elevated market
prices.
When
subsidized urea is diverted to industries, the expected benefits of nutrient
efficiency and soil health improvements are lost, diminishing the impact of
initiatives designed to boost agricultural productivity and sustainability.
Additionally, this diversion indirectly affects the neem-coated urea market by
creating supply constraints and potentially driving up the price of neem-coated
urea due to reduced availability of conventional urea.
Effective
monitoring and enforcement are crucial to ensuring that subsidized urea reaches
its intended agricultural users. Inadequate oversight can lead to widespread
misuse. For instance, in 2023, the agricultural department discovered 96 bags
of neem-coated urea, each weighing 50 kilograms, concealed in a factory in
Pandesara GIDC, Surat. These bags, intended for farmers, were found being
supplied to industrial users instead.
The
diversion of subsidized urea can result in artificial shortages and price
fluctuations in the neem-coated urea market, causing instability that
complicates planning and budgeting for farmers. This market volatility affects
both conventional and neem-coated urea, making it more challenging for farmers
to manage their costs effectively.
Competition from Alternatives
Several
slow-release fertilizers, including polymer-coated urea and controlled-release
products, present competition to neem-coated urea. These alternatives offer
comparable benefits in nutrient release and efficiency, making it challenging
for neem-coated urea to differentiate itself. Additionally, traditional urea is
typically less expensive than neem-coated urea. In cost-sensitive areas like
Uttar Pradesh and Bihar, where price sensitivity is high, farmers might choose
conventional urea over neem-coated urea due to its lower cost. This preference
for cheaper options can negatively impact neem-coated urea’s market share.
Fertilizers
like ammonium nitrate have a well-established presence in Indian states, such
as Punjab, a major agricultural region where it is widely used and accepted.
The entrenched position of such products can overshadow newer entrants like
neem-coated urea. Established alternatives with a proven track record can be
difficult for neem-coated urea to compete against. In regions like Maharashtra
and Karnataka, DAP (Diammonium Phosphate) is commonly used due to its phosphate
content, which is essential for crops such as sugarcane. Neem-coated urea may
struggle in these areas if DAP is better suited to local agricultural
practices.
Natural
fertilizers such as compost and green manure are preferred in environmentally
conscious regions like Kerala for their sustainability and soil health
benefits. These preferences highlight the challenges neem-coated urea faces due
to competition from various alternatives, including other slow-release
fertilizers, cost-effective solutions, and region-specific practices.
Key Market Trends
Consumer Demand for Safe and
High-Quality Food
The
growing consumer demand for safe and high-quality food is having a significant
impact on the neem-coated urea market. Consumers are increasingly concerned
about the safety of their food, favoring produce that is grown with minimal
chemical inputs. Neem-coated urea, with its organic neem oil coating, meets
this demand for safer agricultural practices by reducing chemical runoff and
contamination, making it an attractive option for producing safer food.
The
emphasis on high-quality agricultural produce encompassing freshness, taste,
and nutritional value also drives the demand for neem-coated urea. Its
slow-release technology ensures a consistent supply of nutrients to crops,
enhancing their quality and helping farmers achieve better market prices.
As
awareness of environmental and health issues rises, consumers are showing a
strong preference for organic and sustainably produced food. Neem-coated urea’s
compatibility with organic farming and its role in sustainable agriculture
enhance its appeal. Farmers who use neem-coated urea can market their produce
as environmentally friendly, appealing to consumers who prioritize
sustainability.
Neem-coated
urea improves crop yields and quality, which is essential for producing premium
products. This positions farmers to access and compete in higher-value markets.
The increasing focus on health and wellness among consumers also supports the
use of neem-coated urea, as it minimizes harmful nutrient leaching and reduces
chemical residues, aligning with the health-conscious trend and improving the
marketability of crops. As consumers continue to seek produce that meets high
safety and quality standards, neem-coated urea becomes a crucial tool for
farmers aiming to meet these expectations and take advantage of emerging market
opportunities.
Segmental Insights
Sales Channel Insights
Based
on Sales Channel, the Indirect emerged as the dominating
segment in the Indian market for Neem Coated Urea in 2024. India's agricultural sector is extensive
and largely rural, making indirect sales channels such as distributors,
wholesalers, and retailers crucial for the distribution of neem-coated urea.
These channels have established networks that ensure neem-coated urea is
accessible to farmers across various regions. Distributors and retailers
possess the infrastructure and local expertise to effectively reach remote
areas where direct sales might face logistical challenges. Farmers depend on
local distributors and retailers due to their established relationships and
credibility within the community. These intermediaries have a deep
understanding of regional agricultural practices and needs, which helps in
building trust and ensuring the acceptance of neem-coated urea.
Government
subsidies and fertilizer distribution programs are generally routed through
these indirect sales mechanisms. Agricultural cooperatives, state agencies, and
local distributors are responsible for ensuring that subsidized neem-coated
urea reaches its intended recipients. Indirect channels facilitate broad market
coverage, making neem-coated urea available in both major agricultural centers
and remote locations. This convenience allows farmers to purchase neem-coated
urea from local retailers and cooperatives, minimizing the need to seek out
direct sales options. Indirect sales channels offer cost efficiency, extensive
market reach, and localized support, effectively serving India's diverse and
geographically dispersed farming community.
End Use Insights
Based
on End Use, Horticulture Crops emerged as the fastest growing segment in the Indian
market for Neem Coated Urea during the forecast period. Horticultural crops,
including fruits, vegetables, and flowers, typically fetch higher market
prices, which encourages farmers to invest in fertilizers that improve quality
and yield. The rising consumer demand for fresh and high-quality produce is
driving the use of advanced fertilizers like neem-coated urea to meet these
expectations. The organic nature of neem-coated urea fits well with the
increasing preference for natural and sustainably produced food. As a result,
farmers cultivating horticultural crops are more inclined to use neem-coated
urea to enhance product quality and minimize chemical residues.
The
slow-release mechanism of neem-coated urea provides a consistent supply of
nutrients, which boosts the growth, appearance, and flavor of horticultural
crops. This controlled release also reduces nutrient runoff and leaching, which
is particularly important for high-value crops typically grown in smaller, more
controlled environments. Furthermore, neem-coated urea supports long-term soil
health, essential for maintaining high-quality horticultural production. The
horticulture sector’s adoption of innovative agricultural practices aligns well
with the efficiency and environmental benefits offered by neem-coated urea.
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Regional Insights
Based
on Region, North India emerged as the dominant region in the Indian market for India
Neem Coated Urea in 2024. North India, encompassing major agricultural states
such as Punjab, Haryana, Uttar Pradesh, and Himachal Pradesh, plays a crucial
role in the production of staple crops like wheat, rice, and sugarcane. The
extensive cultivation of these crops generates substantial demand for
fertilizers, including neem-coated urea. The Indian government offers
significant subsidies for fertilizers in this region, which helps make
neem-coated urea more affordable and accessible to local farmers.
North
India benefits from a well-established network of distributors, wholesalers,
and retailers, ensuring effective supply of neem-coated urea to farmers. The
region’s robust logistics and distribution systems facilitate widespread
availability of the product. Neem-coated
urea enhances nutrient use efficiency, which is crucial for improving crop
yields and soil health in North India’s large-scale agricultural operations.
Given the economic importance of crops like wheat and sugarcane, farmers are
motivated to invest in effective fertilizers to optimize yields and enhance
quality. This drive for high-quality produce and better agricultural practices
further fuels the adoption of neem-coated urea.
Recent Development
- In
March 2024, Prime Minister Modi officially opened the upgraded Sindri
fertilizer plant in Jharkhand, which is operated by Hindustan Urvarak and
Rasayan Limited. The project, which began with the laying of the foundation
stone in May 2018, is expected to boost the country's domestic urea production
by 1.27 million tonnes annually. The new facility includes an ammonia-urea
plant with a production capacity of 2,200 tonnes per day for ammonia and 3,850
tonnes per day for neem-coated urea. The total investment for the project was USD
1064.87 Million, with NTPC, IOCL, and CIL each holding a 29.67% equity share
and FCIL contributing 11%.
- As
of July 2024, the Government of India has set the Maximum Retail Price (MRP)
for urea at USD 3.21 for a 50 kg bag and USD 2.89 for a 45 kg bag. This price includes
a dealer margin of USD 4.23 per metric ton for private traders, PSUs, and
cooperatives, and an additional USD 0.60 per metric ton for retailers for
acknowledging receipt and reporting stock in the mFMS (iFMS) system. The MRP
does not cover taxes or charges for neem coating. Any difference between the
farm gate cost of fertilizers and the MRP paid by farmers is subsidized by the
Government of India, which compensates the fertilizer manufacturer or importer.
Key Market Players
- Indian Farmers Fertiliser Cooperative
Limited
- Krishak Bharati Cooperative Limited
- National Fertilizers Limited
- Yara Fertilisers India Pvt. Ltd.
- Mangalore Chemicals and Fertilizers
Limited
- Gujarat State Fertilizers &
Chemicals Limited
- Indorama India Private Limited
- Fertilizers and Chemicals Travancore
Ltd.
- Zuari Agro Chemicals Ltd.
- Shakti Fertilizers Ltd.
|
By
End Use
|
By
Sales Channel
|
By Region
|
- Food Crops
- Cash Crops
- Horticulture Crops
- Plantation Crops
- Others
|
|
- West India
- North India
- South India
- East India
|
Report Scope:
In this report, the India Neem Coated Urea Market
has been segmented into the following categories, in addition to the industry
trends which have also been detailed below:
- India Neem Coated Urea Market, By End Use:
o Food Crops
o Cash Crops
o Horticulture Crops
o Plantation Crops
o Others
- India Neem Coated Urea Market, By Sales Channel:
o Direct
o Indirect
- India Neem Coated Urea Market, By Region:
o West India
o North India
o South India
o East India
Competitive Landscape
Company Profiles: Detailed analysis of the major companies presents in the India Neem
Coated Urea Market.
Available Customizations:
India Neem Coated Urea Market report with the given
market data, TechSci Research offers customizations according to a company's
specific needs. The following customization options are available for the
report:
Company Information
- Detailed analysis and profiling of additional
market players (up to five).
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