Cabinet Clears New Urea Investment Policy to Boost Self-Reliance

The Department of Fertilizers will implement the policy, which will serve as the basis for approving new gas-based urea manufacturing projects across the country.

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026) to encourage new investments in domestic urea manufacturing. The policy is designed to increase India's fertilizer production capacity, reduce dependence on imports and move the country closer to self-sufficiency in urea.The new framework will support the establishment of gas-based urea manufacturing plants while creating a more transparent and financially viable investment environment for companies entering the sector.

Policy introduces investor-friendly reforms

NIPU-2026 brings several changes compared with the earlier New Investment Policy (NIP)-2012. The revised policy separates fixed and variable costs to improve transparency, introduces a return on equity ranging between 12 per cent and 16 per cent, and provides protection against foreign exchange fluctuations by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.

According to the Government, these measures are expected to reduce project costs significantly, generating savings of more than ₹250 crore for each new urea plant established under the new policy compared with the previous investment framework. The Department of Fertilizers will implement the policy, which will serve as the basis for approving new gas-based urea manufacturing projects across the country.

Higher domestic production to reduce import dependence

India currently has 33 operational urea manufacturing units with a total installed capacity of 269.42 lakh metric tonnes. Despite this capacity, domestic production continues to fall short of national demand, making imports necessary to bridge the gap. The earlier investment policy introduced in 2012 led to the establishment of six new urea plants, including four developed through joint ventures involving public sector companies and two by private firms. That policy expired in October 2019.

With several fresh proposals for urea manufacturing already under consideration, the Government believes NIPU-2026 will accelerate investments, strengthen fertilizer security, support farmers with a stable domestic supply and contribute to the broader vision of Atmanirbhar Bharat.