Cabinet Approves National Urea Investment Policy 2026 to Boost Self-Reliance in Urea Production under Atmanirbhar Bhara

Cabinet Approves National Urea Investment Policy 2026 to Boost Self-Reliance in Urea Production under Atmanirbhar Bhara

Cabinet Committee on Economic Affairs (CCEA) has approved the National Urea Investment Policy–2026 (NIPU–2026) to strengthen India's self-reliance in urea production under the Atmanirbhar Bharat initiative and to encourage investment in gas-based urea manufacturing plants. The policy aims to reduce dependence on imported urea, enhance domestic production capacity, and ensure a reliable supply of fertilisers for the agricultural sector.

National Investment Policy for Urea-2026 (NIPU-2026)

¨     Nodal Department: Department of Fertilizers, Ministry of Chemicals and Fertilizers.

¨     Objective: Promote fresh investment in gas-based urea manufacturing units to increase indigenous urea production and reduce import dependence.

¨     Coverage: All new gas-based urea manufacturing projects under the policy.

¨     Applicability: Uniform incentives for public sector, private sector and cooperative sector projects.

¨     Reason for the Policy: Introduced after the investment window under New Investment Policy (NIP)-2012 expired in October 2019, while new proposals for urea plants continued to be received.

Key Features

¨     Separate treatment of fixed and variable costs for greater transparency in pricing.

¨     Return on Equity (RoE) band introduced with Minimum (12%) and Maximum (16%).

¨     Foreign exchange risk mitigation by converting fixed costs into Indian Rupees after four years based on prevailing exchange rates.

¨     Expected to generate savings of over ₹250 crore per plant compared with projects established under NIP-2012.

Targets under NIPU-2026

¨     Encourage establishment of 8–9 new gas-based urea plants.

¨     Create an additional production capacity of about 10 million tonnes annually.

¨     Achieve self-sufficiency in urea production and substantially reduce or eliminate imports.

Expected Outcomes

¨     Narrow the gap between domestic demand and indigenous production.

¨     Improve transparency and financial viability of new urea projects.

¨     Save foreign exchange by reducing fertilizer imports.

¨     Ensure a stable and reliable supply of urea for Indian agriculture.

¨     Strengthen India’s fertilizer security under Atmanirbhar Bharat.

Significance

¨     Strengthens Fertilizer Security: Expands domestic urea production, reducing dependence on imports and ensuring a more reliable supply of a critical agricultural input.

¨     Advances Atmanirbhar Bharat: Promotes indigenous manufacturing capacity, making India progressively self-reliant in urea production.

¨     Catalyses Private and Public Investment: Introduces a transparent and predictable incentive framework that encourages investment by public, private and cooperative sectors in gas-based urea plants.

¨     Improves Fiscal Efficiency: The revised pricing framework and policy design are expected to reduce project costs, generating savings of over ₹250 crore per plant compared with NIP-2012.

¨     Reduces Import Dependence and Saves Foreign Exchange: Higher indigenous production lowers urea imports, reducing exposure to global market uncertainties and conserving valuable foreign exchange.

Promotes Industrial Growth and Employment: Establishment of new urea plants will stimulate industrial activity, strengthen the domestic fertilizer manufacturing ecosystem and generate direct and indirect employm