Neem-coated Urea dissolves more slowly compared to normal Urea, which helps prevent leaching and ensures a gradual release of nitrogen into the soil. Neem has inhibitory properties that reduce nitrogen loss at multiple stages, including volatilization and denitrification. By slowing down the conversion of Urea into nitrate, it minimizes excess nitrate accumulation, reducing denitrification losses and improving nitrogen use efficiency in crops.

To curb misuse and diversion of highly subsidized Urea to the chemical industry, the Government of India made it mandatory for all Urea manufacturers to Neem-coat 100% of their production. This move not only ensures that Urea is used exclusively for agriculture but also enhances soil fertility and crop productivity by improving nitrogen retention.