Cabinet Approves National Investment Policy for Urea-2026
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026) as proposed by the Department of Fertilizers. This policy is designed to encourage new investments in the urea sector specifically for setting up gas-based urea manufacturing units within the country, with the primary objective of achieving self-sufficiency in urea production.
The policy introduces several key changes compared to the previous NIP-2012 framework. These include the separation of fixed and variable costs to ensure greater transparency in cost accounting, the introduction of a viable Return on Equity (RoE) band with a floor set at 12% and a ceiling at 16% to provide investors with predictable returns, and mitigation of foreign exchange risk through the conversion of fixed cost into Indian rupees after four years based on prevailing exchange rates. These measures are estimated to result in savings of over ₹250 crore for each new plant established under the NIPU-2026 policy compared to the NIP-2012 framework.
The policy covers the setting up of new urea manufacturing units. Currently, India has 33 operational urea manufacturing units with a total reassessed/installed capacity of 269.42 lakh metric tonnes (LMT). There exists a gap between indigenous production and domestic demand for urea, which is currently filled through imports. The need for this new policy arose as the previous NIP-2012 period expired in October 2019; under that policy, six new urea units were established, including four through joint venture companies of nominated public sector undertakings and two by private companies. The Department of Fertilizers has received various proposals for setting up new urea units, necessitating this updated investment policy.