Cabinet Committee on Economic Affairs approves new urea investment policy to boost domestic production, cut import dependence
New Delhi, July 15
The Cabinet Committee on Economic Affairs on Tuesday approved the National Investment Policy for Urea-2026 for Atmanirbhar Bharat to encourage fresh investments in domestic urea manufacturing, to increase indigenous production and reduce the country's dependence on imports.The new policy, approved by the Cabinet, will support the setting up of new gas-based urea manufacturing units across the country as India moves towards self-sufficiency in urea production.
Briefing the media after the Cabinet meeting, Union Minister Ashwini Vaishnaw said, "About 8-9 new urea manufacturing plants will be established, where each of them will produce about 12.7 lakh metric tonnes. From these plants, about 1 crore metric tonnes of urea will be produced."He added, "Our import dependence has reduced up until now and with these new plants, the complete urea requirement will be manufactured in India and will move us toward Atmanirbhar Bharat."
According to the Cabinet, the policy introduces several changes compared with the earlier New Investment Policy (NIP)-2012, including the separation of fixed and variable costs for greater transparency, the introduction of a return on equity (RoE) band with a floor of 12 per cent and a ceiling of 16 per cent, and measures to mitigate foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.
The Cabinet said these changes are expected to result in savings of more than Rs 250 crore for every plant established under NIPU-2026 compared with projects set up under the previous policy.
The new policy will apply to all future gas-based urea manufacturing units established under NIPU-2026.
According to the Department of Fertilizers, the earlier NIP-2012 helped establish six new urea manufacturing units, including four through joint venture companies of nominated public sector undertakings and two by private companies. The policy period expired in October 2019.India currently has 33 operational urea manufacturing units with a total reassessed installed capacity of 269.42 lakh metric tonnes (LMT). However, a gap remains between domestic production and demand, requiring imports to meet the country's urea requirement.
The Cabinet said the Department of Fertilizers has received multiple proposals for new urea plants, making a fresh investment policy necessary to encourage additional capacity and strengthen India's long-term fertiliser security.
— ANI
Reader Comments
Great initiative to reduce import dependence! The cost savings of Rs 250 crore per plant are impressive. I'm curious though—are these plants going to use domestic natural gas? We need to ensure energy security as well.
This is a positive step towards self-reliance! But why only 8-9 plants? India's urea demand is massive—about 35 million tonnes annually. We need more aggressive capacity addition. Also, what about promoting organic alternatives?
Interesting policy changes—separating fixed and variable costs for transparency is smart. But I worry about the implications for fertilizer subsidies. Will these savings actually reach farmers or just benefit corporate pockets? 🤔
Good move but we also need to address the issue of overuse of urea. Our soils are getting degraded. Atmanirbhar Bharat should also mean sustainable agriculture. Hope the policy includes some provisions for balanced fertilizer use.
I appreciate the effort but honestly, we have been hearing such policies for years. The previous NIP-2012 only added 6 plants in 7 years. Implementation is key! We need to see actual timelines and progress reports.
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