The Cabinet on Wednesday approved the National Investment Policy for Urea-2026 to facilitate setting up of 8-9 new urea plants with an annual manufacturing capacity totalling 10 million tonnes, aiming to eliminate imports completely, reduce government costs and subsidy burdens.
The policy is expected to encourage fresh investment in gas-based urea manufacturing units across the country and support India’s goal of self-sufficiency. Announcing the decision after the Cabinet meeting, Information and Broadcasting Minister Ashwini Vaishnaw said the country imports 10 million tonnnes urea annually while 30 million tonnes of the fertiliser is produced domestically. The new policy introduces reforms such as separating fixed and variable costs, assuring a return on equity between 12% and 16%, and reducing foreign exchange risks by converting fixed costs into rupees after four years. Officials estimate these measures will save more than Rs 250 crore per plant compared with the earlier 2012 policy.
Bridging the Demand Gap
The move comes at a time when India continues to depend on imported urea to bridge the gap between domestic production and rising demand. Although six new plants were commissioned under the 2012 investment policy, the country’s demand has continued to grow by nearly 5% every year. Currently, India has 33 operational urea manufacturing units with a total installed capacity of about 26.9 million metric tonnes. Despite global urea prices rising sharply over the past few years, the government has maintained the subsidised price of Rs 242 for a 45-kg bag to protect farmers from higher input costs.
The new policy is expected to attract both public and private investment in greenfield and brownfield projects based on natural gas, improving efficiency while ensuring long-term financial viability for manufacturers. By encouraging domestic production, the government hopes to reduce import dependence, strengthen fertilizer security, and provide a stable supply of urea to farmers across the country.
The policy is a significant step toward achieving the vision of Aatmanirbhar Bharat. Higher domestic production is expected to save foreign exchange, reduce exposure to volatile international prices, and create employment during the construction and operation of new plants. Once implemented, the additional capacity is expected to meet the country’s growing fertilizer needs, improve agricultural productivity, and strengthen India’s food security while making the fertilizer sector more sustainable and economically resilient, the minister said.
