Cabinet approves National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026)

**Executive Summary** The Cabinet Committee on Economic Affairs approved the National Investment Policy for Urea-2026 (NIPU-2026) on July 15, 2026, to promote self-sufficiency in the fertilizer sector. The policy facilitates the establishment of new gas-based urea manufacturing units to bridge the gap between indigenous production and national demand. It introduces key financial reforms, including risk mitigation strategies and cost transparency, aimed at saving over Rs. 250 crore per plant compared to previous policies. **Key Points / Main Content** **Policy Objectives and Framework** * **Encouraging Investment:** The policy aims to attract new investments for setting up gas-based urea manufacturing units under the "Atmanirbhar Bharat" initiative. * **Self-Sufficiency:** The primary goal is to achieve indigenous production levels that meet domestic demand, reducing the current reliance on urea imports. * **Scope of Implementation:** The policy covers the strategy and targets for setting up new urea manufacturing units across the country. **Financial Provisions and Transparency** * **Cost Management:** For greater transparency, the policy mandates the separation of fixed and variable costs. * **Return on Equity (RoE):** A viable RoE band has been introduced, established with a floor of 12% and a ceiling of 16%. * **Foreign Exchange Risk Mitigation:** To manage financial risk, fixed costs will be converted into INR after four years based on prevailing exchange rates. * **Cost Efficiency:** These measures are projected to generate savings exceeding Rs. 250 crore for each plant established under NIPU-2026 relative to the NIP-2012 framework. **Industry Context** * **Current Capacity:** There are currently 33 operational urea manufacturing units in India with a total reassessed/installed capacity of 269.42 LMT. * **Policy Succession:** NIPU-2026 succeeds NIP-2012 (which expired in October 2019). Under the previous policy, six new units were established (four via Joint Venture Companies and two by private companies). * **Demand Gap:** The Department of Fertilizers initiated this policy in response to various new proposals and the ongoing need to fill the gap between local production and demand. **Impact Analysis** **Stakeholder: Department of Fertilizers / Ministry of Chemicals and Fertilizers** **Impact** The department will oversee the implementation of NIPU-2026 to achieve national self-sufficiency and manage the transition from the expired NIP-2012 framework. **Action Required** Review and process the various proposals received for setting up new urea units and monitor the establishment of plants to ensure they meet the goal of reduced import dependency. **Stakeholder: Potential Investors and Manufacturing Companies (PSUs and Private Sector)** **Impact** Investors gain a more transparent financial framework with guaranteed RoE floors and ceilings, alongside protections against long-term foreign exchange fluctuations. **Action Required** Submit proposals for new gas-based urea manufacturing units and adhere to the new cost-separation and INR-conversion requirements defined in the policy. **Stakeholder: Domestic Urea Industry** **Impact** The industry will see an expansion in capacity beyond the current 33 units and 269.42 LMT, moving the country toward a state of indigenous production that matches demand. **Action Required** Operationalize new plants under the NIPU-2026 guidelines to increase the total national installed capacity.

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