Cabinet approves National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026)

The Cabinet Committee on Economic Affairs (CCEA) has approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026), proposed by the Department of Fertilizers.

Objectives of new policy 

The new policy aims to promote fresh investments in the urea sector by encouraging the establishment of new gas-based urea manufacturing units across the country.

NIPU-2026 seeks to enhance domestic urea production and support India’s goal of self-sufficiency in fertiliser production, thereby reducing dependence on imports.

The policy succeeds the New Investment Policy (NIP)-2012, which had attracted investments in greenfield, brownfield, expansion and revival projects in the fertiliser sector.

Key Features of NIPU 2026

Compared with NIP-2012, NIPU-2026 introduces several key reforms. These include:

• The separation of fixed and variable costs for greater transparency,
• The introduction of a Return on Equity (RoE) band with a minimum of 12% and a maximum of 16%, and
• The mitigation of foreign exchange risk by converting fixed costs into Indian Rupees after four years based on prevailing exchange rates.

These reforms are expected to generate savings of more than ₹250 crore for each new urea plant established under the new policy compared with the earlier policy.

NIP-2012

• Under NIP-2012, six new urea plants were commissioned, including four through joint ventures promoted by public sector undertakings (PSUs) and two by private companies. However, the investment window under NIP-2012 expired in October 2019.

Urea Demand and Production 

India’s demand for urea is increasing at an average rate of around 5% annually. The country currently produces nearly 30 million tonnes of urea every year, while domestic demand has risen to approximately 40 million tonnes, resulting in imports of around 10 million tonnes annually to bridge the supply gap.

At present, India has 33 operational urea manufacturing units with a total reassessed/installed production capacity of 269.42 lakh metric tonnes (LMT).

The government believes that increasing indigenous production through NIPU-2026 will reduce import dependence, improve fertiliser security, and strengthen the vision of Atmanirbhar Bharat in the fertiliser sector.

Source: PIB

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