Cabinet Approves National Urea Investment Policy 2026 to Boost Fertilizer Production

New Delhi, July 15: In a meeting chaired by Prime Minister Narendra Modi, the Cabinet Committee on Economic Affairs (CCEA) approved the National Urea Investment Policy 2026 (NIPU-2026) proposed by the Fertilizer Department.

This policy aims to encourage new investments in gas-based urea manufacturing units across the country. The initiative is expected to enhance domestic urea production and help achieve the goal of self-sufficiency in urea.

According to the government, the new policy introduces several significant changes compared to the National Investment Policy 2012 (NIP-2012). These changes include separating fixed and variable costs for greater transparency, establishing a viable range for Return on Equity (ROE) with a minimum of 12% and a maximum of 16%, and converting fixed costs into rupees based on prevailing exchange rates after four years to mitigate foreign exchange risk.

The government statement indicated that these provisions are expected to save over ₹250 crore for each new plant established under NIPU-2026 compared to NIP-2012.

New urea manufacturing units will be set up under the framework of NIPU-2026. Previously, to attract investment in the urea sector, the Fertilizer Department introduced the new investment policy (NIP-2012) in 2012. This policy aimed to modernize existing plants, restart closed (brownfield) units, and promote the establishment of new projects.

Under NIP-2012, six new urea units were established, four through joint ventures of designated public sector companies (PSUs) and two by private companies. However, the investment period for this policy ended in October 2019.

Currently, there are 33 urea manufacturing units operating in the country, with a total installed production capacity of 26.942 million metric tons (MMT).

The government noted that domestic urea production is still insufficient to meet the country’s demand, necessitating imports to bridge the gap between demand and supply.

The Fertilizer Department has received several proposals for establishing new urea units in the country. With the approval of the National Urea Investment Policy 2026, these projects are expected to move forward swiftly.