The Union Cabinet approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026), paving the way for fresh investments in gas-based urea manufacturing units across India. The decision aims to reduce the country’s dependence on imported urea and strengthen self-sufficiency in fertiliser production. The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the policy to encourage both public and private sector participation in new urea projects. India currently imports a substantial share of its urea requirement to bridge the gap between domestic production and rising demand.
Key Features of NIPU-2026
The new policy introduces several reforms compared with the earlier New Investment Policy (NIP)-2012. These changes aim to improve transparency, attract investment and lower long-term subsidy costs. The major provisions include:
Separation of fixed and variable costs to enhance cost transparency.
A Return on Equity (RoE) band of 12% to 16%, ensuring predictable returns for investors.
Reduction of foreign exchange risk by converting fixed costs into Indian rupees after four years using prevailing exchange rates.
According to the government, each new plant established under NIPU-2026 could save more than Rs 250 crore compared with projects approved under NIP-2012.
Policy Expected to Accelerate Investments
The government has decided to bring all new gas-based urea manufacturing units under the
NIPU-2026 framework. As a result, policymakers expect faster investment decisions and a significant expansion of domestic fertiliser production capacity. Moreover, the Department of Fertilizers has already received several proposals for setting up new urea plants, indicating strong industry interest in expanding production.
NIP-2012 Created Six New Urea Plants
The earlier NIP-2012 successfully attracted investments in revamp, expansion, revival, brownfield and greenfield projects. Under that policy six new urea plants were established, four units were developed through joint ventures involving nominated public sector undertakings and two units were set up by private companies. However, the investment window under NIP-2012 expired in October 2019, creating the need for a new policy framework.
India’s Current Urea Production Capacity
India currently operates 33 urea manufacturing units with a total reassessed or installed capacity of 269.42 lakh metric tons (LMT). Despite this sizeable capacity, domestic production remains insufficient to meet the country’s growing fertiliser demand. Consequently, India continues to rely on imports to ensure adequate urea availability for the agriculture sector.
Focus on Atmanirbhar Bharat and Food Security
The government views NIPU-2026 as a critical step toward the broader Atmanirbhar Bharat initiative. By promoting domestic urea manufacturing, the policy seeks to reduce dependence on imported fertilisers, strengthen India’s fertiliser supply chain, enhance food security, improve efficiency in subsidy expenditure and create a stable investment environment for future projects. As reported by msn.com, overall, NIPU-2026 is expected to encourage fresh investments, expand domestic urea production and support India’s long-term goal of achieving greater self-reliance in the fertiliser sector.
