The Union Cabinet on Wednesday approved a new investment policy for the urea sector aimed at attracting fresh investments in domestic manufacturing, as the government seeks to reduce India’s dependence on imports of key fertilisers.
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, has approved the National Investment Policy on Urea 2026 (NIPU-2026), replacing the previous investment policy that expired in 2019.
The new policy aims to encourage the establishment of gas-based urea manufacturing plants in the country to bridge the gap between local production and demand.
“Around 8-9 new urea manufacturing plants will be set up, each of which will produce around 12.7 lakh metric tonnes. Of these plants, around 1 crore metric tonnes of urea will be produced,” Union Minister Ashwini Vaishnao said in a press conference after the Cabinet meeting.
Prime Minister Narendra Modi praised the decision as it will ensure self-reliance in urea production.
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“Our government is not leaving any stone unturned for the welfare of our farmers across the country. In this direction, the proposal of the National Urea Investment Policy 2026 was approved today. This will not only encourage investment in setting up new gas-based urea production plants but will also give new strength to the determination of self-reliance in urea production,” the Prime Minister said on X in Hindi.
According to an official statement, the policy introduces several changes over the 2012 framework, including separating fixed and variable costs for greater transparency, offering a return on equity of 12% to 16%, and reducing foreign exchange risk by converting fixed costs to rupees after four years based on prevailing exchange rates.
The center said that these changes are expected to save more than $250 crore over the life of each plant set up under the new policy as compared to the projects approved under the 2012 policy.
India currently has 33 operational urea manufacturing units with a total installed capacity of 26.94 million tons per annum, according to the statement. However, domestic production still falls short of demand, forcing the country to import large quantities of urea every year.
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The government said the new gas-based urea plants established under NIPU-2026 will help increase domestic production and bring the country closer to self-sufficiency in urea.
The railway projects are expected to add cargo handling capacity of about 44 million tons per year with a target of completion by 2030-2031. The government said shifting freight from roads to railways could reduce carbon dioxide emissions by about 290 million kg annually, equivalent to planting nearly one crore trees.
The projects will also improve connectivity to over 1,500 villages and enhance access to ports, industrial clusters, mining areas and logistics hubs under Prime Minister’s National Master Plan Jati Shakti.
