The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026), in a major move aimed at attracting fresh investments into India's domestic urea manufacturing sector and reducing the country's dependence on imports.
The new policy seeks to promote the establishment of additional gas-based urea manufacturing plants across the country and strengthen India's ability to meet its growing fertiliser requirements through indigenous production. The government said NIPU-2026 is designed to bridge the gap between domestic urea production and demand while advancing the broader objective of achieving self-reliance in the fertiliser sector.
According to the government, the policy introduces a number of important reforms over the earlier New Investment Policy (NIP)-2012. One of the key changes is the separation of fixed and variable costs, which is expected to improve transparency and provide greater clarity in the cost structure of new urea projects.
NIPU-2026 also introduces a Return on Equity (RoE) band, with a minimum return of 12 per cent and a maximum of 16 per cent. The government believes the revised framework will make investments in the sector more predictable and encourage private as well as institutional participation in new manufacturing projects.
Another significant provision seeks to reduce the impact of foreign exchange fluctuations on project costs. Under the new policy, fixed costs will be converted into Indian rupees after four years based on the prevailing exchange rate. The government said this measure will help mitigate foreign exchange-related risks for investors and improve the financial viability of new urea plants.
The Centre said the reforms introduced under NIPU-2026 are expected to generate savings of more than Rs 250 crore for every urea plant established under the new policy, compared with projects set up under NIP-2012. The savings are expected to improve the overall economics of new investments and make capacity expansion more attractive.
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All new gas-based urea manufacturing units will be eligible for support under NIPU-2026. The policy is aimed at increasing indigenous production, ensuring greater availability of fertilisers for farmers and reducing the country's reliance on imported urea.
The Department of Fertilizers had earlier introduced NIP-2012 to attract investments in the revamp, expansion, revival, brownfield and greenfield urea sectors. The policy resulted in the establishment of six new urea plants — four through joint venture companies of nominated public sector undertakings and two by private companies. However, the investment window under NIP-2012 closed in October 2019.
India currently has 33 operational urea manufacturing units with a reassessed installed capacity of 269.42 lakh metric tonnes (LMT). Despite the existing production base, domestic output continues to fall short of national demand, forcing the government to rely on imports to meet the country's fertiliser requirements.
The government said the Department of Fertilizers has received several proposals for setting up new urea manufacturing plants. In view of the growing demand for additional capacity and the need to reduce import dependence, the Centre said a fresh investment policy had become necessary.
NIPU-2026 is therefore expected to provide a new framework for expanding domestic urea manufacturing and support the government's long-term vision of building a more self-reliant and secure fertiliser ecosystem under the Atmanirbhar Bharat initiative.
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