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India to Boost Urea Production by 10 Million Tonnes
15 Jul
Summary
- New policy targets 10 million tonnes of additional urea production.
- Eight to nine new gas-based urea plants will be established.
- Policy aims to make India completely self-reliant in fertilizer.
The Indian government has approved a new National Investment Policy for Urea (NIPU-2026), designed to enhance domestic urea production significantly. This policy aims to establish approximately eight to nine new gas-based urea manufacturing units, collectively adding ten million tonnes to the country's production capacity.
The new framework is an update to the 2012 New Investment Policy (NIP). It introduces revised incentives intended to attract new investments into the domestic urea manufacturing sector. These changes are projected to save over Rs 250 crore for each plant established under NIPU-2026 compared to the previous policy.
This strategic move by the government addresses India's current import dependency, as domestic production of around 30 million tonnes falls short of the annual requirement of 40 million tonnes. The policy seeks to achieve complete self-reliance in urea, a crucial fertilizer for agriculture, amidst rising demand.
Key revisions in NIPU-2026 include separating fixed and variable costs for clarity, establishing a viable return on equity band (12-16%), and mitigating foreign exchange risks. The incentives provided under this policy will be uniform for private, government, and cooperative sector projects.
