Cabinet approves National Investment Policy for Urea-2026 to boost domestic production
The Union Cabinet has cleared a new investment policy aimed at expanding India's domestic urea manufacturing capacity and reducing reliance on imports. The initiative seeks to attract fresh investments in gas-based urea plants while introducing a more transparent and financially viable framework for new projects.
- Jul 15, 2026,
- Updated Jul 15, 2026 3:55 PM IST
The Union Cabinet has 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 to reduce India's dependence on imports and strengthen self-sufficiency in fertiliser production.
Approved by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi, the policy is aimed at encouraging both public and private sector investments in new urea plants. India currently imports a significant portion of its urea requirement to bridge the gap between domestic production and demand.
New policy details
The new policy introduces several changes over the earlier New Investment Policy (NIP)-2012. These include separating fixed and variable costs to improve transparency, introducing a Return on Equity (RoE) band with a minimum of 12% and a maximum of 16%, and reducing foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.
According to the government, these reforms are expected to generate savings of more than Rs 250 crore for every new plant established under NIPU-2026 compared with projects approved under NIP-2012.
All new gas-based urea manufacturing units proposed in the country will be covered under the new policy framework. The government expects the policy to encourage timely investments and expand domestic fertiliser production capacity.
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The previous New Investment Policy-2012, introduced to attract investment in revamp, expansion, revival, brownfield and greenfield projects, resulted in the establishment of six new urea plants. These included four units developed through joint ventures of nominated public sector undertakings and two by private companies. The investment window under NIP-2012 expired in October 2019.
Urea manufacturing units
At present, India has 33 operational urea manufacturing units with a total reassessed or installed capacity of 269.42 lakh metric tonnes (LMT). Despite this capacity, domestic production remains insufficient to meet the country's growing fertiliser demand, making imports necessary.
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The Department of Fertilizers has received several proposals for setting up new urea manufacturing units, highlighting continued industry interest in expanding production capacity. The government believes NIPU-2026 will provide a stable policy framework to facilitate these investments while improving efficiency and reducing subsidy-related costs.
The approval is part of the government's broader push towards Atmanirbhar Bharat, with a focus on strengthening domestic manufacturing, improving food security and reducing reliance on imported fertilisers.
The Union Cabinet has 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 to reduce India's dependence on imports and strengthen self-sufficiency in fertiliser production.
Approved by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi, the policy is aimed at encouraging both public and private sector investments in new urea plants. India currently imports a significant portion of its urea requirement to bridge the gap between domestic production and demand.
New policy details
The new policy introduces several changes over the earlier New Investment Policy (NIP)-2012. These include separating fixed and variable costs to improve transparency, introducing a Return on Equity (RoE) band with a minimum of 12% and a maximum of 16%, and reducing foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.
According to the government, these reforms are expected to generate savings of more than Rs 250 crore for every new plant established under NIPU-2026 compared with projects approved under NIP-2012.
All new gas-based urea manufacturing units proposed in the country will be covered under the new policy framework. The government expects the policy to encourage timely investments and expand domestic fertiliser production capacity.
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The previous New Investment Policy-2012, introduced to attract investment in revamp, expansion, revival, brownfield and greenfield projects, resulted in the establishment of six new urea plants. These included four units developed through joint ventures of nominated public sector undertakings and two by private companies. The investment window under NIP-2012 expired in October 2019.
Urea manufacturing units
At present, India has 33 operational urea manufacturing units with a total reassessed or installed capacity of 269.42 lakh metric tonnes (LMT). Despite this capacity, domestic production remains insufficient to meet the country's growing fertiliser demand, making imports necessary.
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The Department of Fertilizers has received several proposals for setting up new urea manufacturing units, highlighting continued industry interest in expanding production capacity. The government believes NIPU-2026 will provide a stable policy framework to facilitate these investments while improving efficiency and reducing subsidy-related costs.
The approval is part of the government's broader push towards Atmanirbhar Bharat, with a focus on strengthening domestic manufacturing, improving food security and reducing reliance on imported fertilisers.