India Approves New Urea Investment Policy for Self-Reliance

India’s Union Cabinet approved the National Investment Policy for Urea-2026 (NIPU-2026) on Wednesday, aiming to attract investment in domestic urea manufacturing and lessen reliance on imports. The policy replaces the 2019 framework and seeks to establish 8-9 new gas-based urea plants, each capable of producing around 1.27 million metric tonnes.

The new policy introduces changes like separating fixed and variable costs, a 12-16% return on equity band, and converting fixed costs to rupees after four years to mitigate foreign exchange risk. Officials estimate these adjustments will save over ₹250 crore per plant compared to the previous 2012 policy.

Currently, India has 33 urea manufacturing units with a combined capacity of 26.94 million tonnes annually, but still imports significant amounts to meet demand. The government anticipates NIPU-2026 will boost indigenous production and bring the nation closer to self-sufficiency in urea, a key fertilizer.