Cabinet approves NIPU-2026 to boost domestic urea production

Ziraat Times Team Report

New Delhi, July 15: 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) to promote fresh investments in domestic urea production and move India towards greater self-sufficiency in fertilisers.

The new policy aims to encourage the establishment of gas-based urea manufacturing plants across the country, helping bridge the gap between domestic production and rising demand while reducing dependence on imports.

According to the government, NIPU-2026 introduces several key reforms over the earlier New Investment Policy (NIP)-2012, including separation of fixed and variable costs to improve transparency, a return on equity (RoE) framework with a floor of 12 per cent and a ceiling of 16 per cent, and a mechanism to mitigate foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.

The government said these changes are expected to generate savings of more than Rs 250 crore for every urea plant established under the new policy compared with projects developed under NIP-2012.

Under the approved framework, all new gas-based urea manufacturing units will be established through the National Investment Policy for Urea-2026.

Explaining the rationale behind the policy, the government said India currently has 33 operational urea manufacturing units with a total reassessed installed capacity of 269.42 lakh metric tonnes (LMT). However, domestic production continues to fall short of demand, requiring imports to meet the country’s fertiliser requirements.

The Department of Fertilizers noted that it has received multiple proposals for setting up new urea plants, underlining the need for a fresh investment policy after the earlier NIP-2012 investment window expired in October 2019.

The government said the NIP-2012 had facilitated the establishment of six new urea plants, including four units developed through joint venture companies of public sector undertakings and two by private companies.

With NIPU-2026, the Centre expects to attract fresh investment in the fertiliser sector, strengthen domestic manufacturing capacity and support the goal of Atmanirbhar Bharat by improving India’s self-reliance in urea production.