The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026) to promote fresh investments in the domestic urea sector and strengthen India’s self-sufficiency in fertilizer production.
The policy aims to encourage the establishment of new gas-based urea manufacturing plants across the country to reduce dependence on imports and bridge the gap between domestic production and demand.
According to the government, NIPU-2026 introduces several key reforms over the earlier New Investment Policy (NIP)-2012. These include the separation of fixed and variable costs to improve transparency, the introduction of a Return on Equity (RoE) band with a minimum of 12 per cent and a maximum of 16 per cent, and mitigation of foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.
The government said these changes are expected to generate savings of more than Rs 250 crore for each urea plant established under NIPU-2026 compared with projects set up under NIP-2012.
Under the new policy, all new gas-based urea manufacturing units will be eligible for support, with the objective of increasing indigenous production and advancing the goal of an Atmanirbhar Bharat in the fertilizer sector.
The Department of Fertilizers had introduced the New Investment Policy (NIP)-2012 to attract investments in revamp, expansion, revival, brownfield and greenfield urea projects. Under that policy, six new urea plants were established, including four through joint venture companies of nominated public sector undertakings and two by private companies. The investment window under NIP-2012 closed in October 2019.
India currently has 33 operational urea manufacturing units with a total reassessed installed capacity of 269.42 lakh metric tonnes (LMT). However, domestic production continues to fall short of demand, necessitating imports to meet the country’s fertilizer requirements.
The government said the Department of Fertilizers has received several proposals for setting up new urea plants, making a fresh investment policy necessary to facilitate capacity expansion and reduce import dependence.
