Neem-Coated Urea: Why Slower Release Was the Point

Neem-coated urea is urea with a thin layer of neem oil on each grain. The coat changes how fast the nitrogen is released into the soil.

1.1 Why do farmers use so much urea?

The PIB factsheet says urea has been one of the most important chemical fertilisers for our crops. The Government of India sells it at a fixed price.

The PIB factsheet gives three facts.

• The government spends more than ₹50,000 crore every year on urea.
• About 340 lakh tonnes of urea are supplied each year.
• They reach more than 140 million farmers.

1.2 What exactly is neem-coated urea?

Neem-coated urea, or NCU, is ordinary urea coated with neem oil. Neem oil is a plant product.

• The coat holds back the release of nitrogen into the soil.
• The coat helps stop diversion of urea to industry.
• The nutrient inside is still plain urea.

1.3 What is the real reason the government promotes it?

The key reason in the exam answer is slow release. The coat slows how fast urea dissolves and gives up its nitrogen. Slow release means less nitrogen is wasted. It also means crops can use more of it.

The government gives a second reason. Cheap, subsidised urea was being diverted to industry. A neem coat makes urea difficult to use for non-farm purposes. This helps stop the leak.

• Main reason: slow release, which raises nitrogen use efficiency.
• Second reason: it curbs diversion of subsidised urea to non-farm use.
• Exam answer: “it slows down the rate of dissolution of urea in the soil”.

Neem coating exists because plain urea loses much of its nitrogen. To see why the coat helps, first see where the nitrogen goes.

2.1 How much nitrogen do crops really use?

Only about a third of urea nitrogen reaches the crop. Sources give slightly different numbers. Two sources give figures.

• The Union Minister said in February 2023 that only 35% is used by the crop.
• A paper by the National Academy of Agricultural Sciences (NAAS) says 30-50% of added urea is used.

The rest is lost before the roots can take it up.

• Used by the crop: about a third (estimates run from 30% to 50%).
• Lost: the rest.

2.2 Where does the lost nitrogen go?

The NAAS paper names three routes of loss.

• Volatilisation: urea breaks down into ammonium. Ammonium turns into ammonia gas and drifts away.
• Leaching: soil microorganisms turn ammonia into nitrates. Nitrates dissolve easily and wash below the roots.
• Denitrification: some nitrogen escapes as gases.

Lost nitrogen also pollutes soil and water. The PIB factsheet says neem oil cuts this contamination.

2.3 What is nitrification, and why does it matter?

Nitrification is the step where soil microorganisms change ammonium into nitrate. Nitrate is the form that leaches away fast.

The Lok Sabha reply says a nitrification inhibitor leaves higher ammonium in the soil than plain prilled urea.

A chemical that slows nitrification is a nitrification inhibitor. The NAAS paper says neem oil has nitrification inhibition properties.

Neem coating works in two linked ways. It slows the release of urea. It also slows nitrification. Both keep nitrogen in the root zone for longer.

3.1 What does the neem coat do in the soil?

A Lok Sabha reply of 7 August 2026 describes the effect in plain terms. Neem-coated urea acts as an effective nitrification inhibitor. It leaves more ammonium in the soil than plain prilled urea.

The same reply says several studies found three gains.

• More nitrogen stays available to the crop.
• Less nitrate leaches away.
• Less ammonia is lost to the air.

The reply adds a warning. Performance varies with soil type, crop and region.

3.2 What did tests of the neem coat show?

A laboratory study in the Asian Journal of Chemistry (2017) found that neem-coated urea slowed nitrate formation. At the highest concentration it cut nitrate formation by 60%. The average cut was 52.5%.

The study names azadirachtin as the active ingredient in neem. It acts as a nitrification inhibitor.

3.3 What did farmers and field studies find?

Field results measure other things. They are still useful.

• Nitrogen loss: the Lok Sabha reply says neem-coated urea cut nitrogen losses by about 10-15%.
• Yield: the same reply says average yield rose by 8.25%.
• Farmer survey: ICAR scientists interviewed 12,604 farmers through 458 Krishi Vigyan Kendras in 2017-19. 76% knew about neem-coated urea. 79% were satisfied with it.
• The gap: farmers still used more nitrogen than the recommended dose.

3.4 Did yields rise for every crop?

A government study gave crop-wise yield gains. PIB reported its interim findings on 24 March 2017.

• Paddy: 5.79%.
• Sugarcane: 17.5%.
• Maize: 7.14%.
• Soybean: 7.4%.
• Tur (red gram): 16.88%.

The interim study also found diversion of urea to non-farm use negligible among farmers after the mandate.

3.5 Does neem coating stop all nitrogen loss?

No. The evidence shows a cut in loss, not an end to it.

• Nitrogen loss: cut by about 10-15%, not removed.
• Results vary: the Lok Sabha reply says performance varies with soil type, crop and region.
• Emissions: a 2024 ICAR review says neem-coated urea has shown promise in reducing CH4 and N2O emissions.

Neem coating did not become law overnight. The country moved in steps. By the end of 2015, every bag of subsidised urea was coated.

4.1 What happened before 2015?

The first step was voluntary.

• 2 June 2008: producers of subsidised fertiliser were allowed to make coated fertiliser, up to 20% of their output.
• 11 January 2011: the ceiling for neem-coated urea rose to 35%.
• By 2014: only about 25% of India’s urea was neem coated.

Even so, the share stayed small.

4.2 What happened in 2015?

Two notifications made the change.

• 24 March 2015: all indigenous urea producers had to make 75% of their subsidised urea neem coated.
• 25 May 2015: the Department of Fertilizers made it 100% for all domestic producers. Producers could charge an extra 5% on the MRP, worked out on ₹5,360 per tonne.
• 1 September 2015: all domestic urea was neem coated from this date.
• 1 December 2015: all imported urea was neem coated from this date.

The PIB booklet says that by December 2015, 100% of the urea reaching farmers was neem coated. Most of these dates fall in 2015-16.

4.3 Is neem coating still compulsory today?

Yes. A Lok Sabha reply of 7 August 2026 says all domestic producers and importers must supply 100% neem-coated urea. The rule has stood since 2015.

The same reply gives production figures.

• 2023-24: 314.1 lakh tonnes.
• 2024-25: 306.4 lakh tonnes.
• 2025-26: 293.2 lakh tonnes.

Urea does not follow the same subsidy system as other fertilisers. Knowing the difference helps with many Economy questions.

5.1 How is urea priced?

The Government of India fixes the maximum retail price, or MRP, of urea by law.

• A 45 kg bag costs ₹242. The price excludes the neem coating charge and taxes.
• The government pays the urea maker a subsidy. It is the gap between the delivered cost at the farm gate and what the maker earns in the market.
• On 4 September 2017 the 45 kg bag replaced the 50 kg bag. PIB says this was done to reduce the consumption of urea.

5.2 What is the Nutrient Based Subsidy, and does urea come under it?

The Nutrient Based Subsidy, or NBS, started on 1 April 2010. It covers phosphatic and potassic fertilisers, called P&K fertilisers. The government sets a fixed subsidy for each grade, based on its nutrient content.

Companies set the MRP of P&K fertilisers, and the government monitors it. Urea is not under NBS. Its price is fixed by the government.

• Urea: price fixed by the government. Subsidy fills the cost gap.
• P&K fertilisers: fixed subsidy per nutrient. Companies set the price.

5.3 Why did diversion of urea become a problem?

Urea is sold at a low, fixed price. Some of it was diverted to industry. The PIB factsheet lists less diversion to industry as one aim of neem coating.

The interim 2017 study found diversion negligible among farmers after the mandate.

Wasted nitrogen is a money problem. It is also a climate problem. Some lost nitrogen escapes as nitrous oxide, a greenhouse gas.

6.1 How strong is nitrous oxide as a greenhouse gas?

Nitrous oxide has a global warming potential 273 times that of carbon dioxide over 100 years. This number comes from the US EPA. One tonne of nitrous oxide traps as much heat as 273 tonnes of CO2 over that period.

EPA adds that nitrous oxide emitted today stays in the air for more than 100 years, on average.

6.2 How much have India’s emissions risen?

A 2019 paper in the Journal of Cleaner Production studied Indian cropland from 1980-81 to 2014-15. It found that nitrous oxide emissions from nitrogen-fertiliser use rose by about 358%.

• Cropland activities give 95.84% of the nitrous oxide emitted by Indian agriculture.
• The authors link the rise to fertiliser policy. Fertiliser intensity explains 48% of the growth in non-CO2 greenhouse gas emissions from cropland.

6.3 Does neem-coated urea help the climate?

It may help. The ICAR-IIRR review of studies in rice says neem-coated urea has shown promise in reducing CH4 and N2O emissions.

Neem coating slows loss from solid urea. Nano Urea tries to solve the same problem in a different way. It is a liquid sprayed on leaves.

7.1 What is Nano Urea?

IFFCO developed Nano Urea. Farmers spray it on leaves.

• Form: a liquid with 4.0% nitrogen. A bottle holds 500 ml.
• Particle size: 20-50 nanometres.
• Surface area: IFFCO says it is 10,000 times that of a 1 mm urea prill.
• Start: commercial production began on 1 August 2021 at IFFCO’s Kalol plant.

IFFCO’s Aonla plant page calls Aonla the “world’s 2nd Nano Urea plant”. This implies Kalol was the first.

7.2 What do the trials say?

Different trials give different numbers. Each number has its own source.

• 2019-20 trials: PIB says trials at 7 institutes showed nitrogen saving “to the extent of 50%“.
• Farmer trials: in ICAR-KVK trials on 94 crops, foliar Nano Urea raised yield by 8%.
• 20-location ICAR trials: foliar Nano Urea added to the basal dose of conventional urea gave a 3-8% yield advantage. It could also replace urea for top-dressing.

PIB reported 11,598 on-farm trials in September 2022.

7.3 Does one bottle really equal one bag?

IFFCO says its product can cut urea use by at least 50%. That is a claim about the crop’s response to a leaf spray. It is not about nitrogen content.

A bottle holds 4.0% nitrogen in 500 ml. That is about 20 g of nitrogen (own arithmetic). A 45 kg bag of urea holds far more.

A 2022 PIB review says the plan is to make 44 crore bottles a year by 2025. It says they equal 200 lakh tonnes of conventional urea. That works out to about 45 kg per bottle (own arithmetic).

7.4 How widely is Nano Urea used?

By July 2025, seven Nano Urea plants had been set up. Their capacity is 27.22 crore bottles a year. Companies had sold 10.68 crore bottles since the start.

• Neem-coated urea: about 293 lakh tonnes made in 2025-26.
• Nano Urea: 10.68 crore bottles sold since the start.

If each bottle counts as one 45 kg bag, that is about 48 lakh tonnes in total (own arithmetic). So Nano Urea is still far smaller than neem-coated urea.

The famous question is UPSC Civil Services Prelims 2016, Q24. It is row 24 of Series A. It asks why the government promotes neem-coated urea. The wrong options describe plausible but false mechanisms.

8.1 What are the common traps?

• Mandate trap. The 100% rule began in 2015 and covers all subsidised urea.
• Pricing trap. Urea is outside NBS. P&K fertilisers are under NBS since 2010.
• Look-alike trap. Nano Urea is a liquid foliar spray. Neem-coated urea is a coated solid.