**Executive Summary**
The Cabinet Committee on Economic Affairs approved the National Investment Policy for Urea-2026 (NIPU-2026) on July 15, 2026, to achieve self-sufficiency in urea production. The policy aims to bridge the gap between indigenous production and demand by encouraging new investments in gas-based manufacturing units. It introduces financial reforms, such as Return on Equity (RoE) bands and foreign exchange risk mitigation, to replace the framework of the expired NIP-2012.
**Key Points / Main Content**
* **Policy Objectives and Targets**
* Encourages the establishment of new gas-based urea manufacturing units to achieve national self-sufficiency.
* Addresses the current production-demand gap currently filled by imports.
* Covers new urea manufacturing units under the NIPU-2026 framework, following the expiration of NIP-2012 in October 2019.
* **Financial Reforms and Incentives**
* Separates fixed and variable costs to ensure greater transparency in the sector.
* Establishes a Return on Equity (RoE) band with a floor of 12% and a ceiling of 16%.
* Mitigates foreign exchange risk by converting fixed costs into INR after four years based on prevailing exchange rates.
* Estimates savings of over Rs. 250 crore per plant compared to the previous NIP-2012 policy.
* **Sectoral Background**
* India currently has 33 operational urea manufacturing units with a total capacity of 269.42 LMT.
* The Department of Fertilizers has already received various proposals for setting up new urea units, necessitating this new policy.
**Impact Analysis**
**Stakeholder: Potential Investors and Manufacturing Companies**
**Impact**
Investors in the urea sector benefit from a structured financial environment, including a guaranteed RoE floor and reduced exposure to long-term foreign exchange fluctuations.
**Action Required**
Interested parties and companies with pending proposals must align their project plans for new gas-based units with the specific provisions and cost structures of NIPU-2026.
**Stakeholder: Department of Fertilizers**
**Impact**
The department is empowered with a formal policy to process received proposals and oversee the expansion of indigenous urea production capacity.
**Action Required**
Implement the strategy for setting up new units and monitor the transition from the previous investment framework to the 2026 policy.
**Stakeholder: Agricultural Sector (National)**
**Impact**
The sector will benefit from a more stable supply of indigenous urea, reducing the national reliance on imports and enhancing "Atmanirbhar Bharat" goals.
**Action Required**
No direct action is required, as this is a manufacturing and investment policy aimed at supply-side stabilization.
Key Entities Referenced
National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026): The primary policy approved to encourage new investments in gas-based urea manufacturing units to achieve self-sufficiency in India.
Department of Fertilizers: The nodal department that proposed the NIPU-2026 and oversees investments and proposals in the urea sector.
Cabinet Committee on Economic Affairs (CCEA): The high-level government committee chaired by the Prime Minister that granted approval for the urea investment policy.
New Investment Policy (NIP) – 2012: The predecessor policy document for the urea sector against which the improvements and cost savings of NIPU-2026 are measured.
Cabinet Committee on Economic Affairs (CCEA)
Cabinet approves National Investment Policy for
Urea-2026 for Atmanirbhar Bharat (NIPU-2026)
प्रव तथ: 15 JUL 2026 3:33PM by PIB Delhi
The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, today
has approved the proposal of the Department of Fertilizers on National Investment Policy for Urea-2026
for Atmanirbhar Bharat (NIPU-2026).
Benefits:
The policy will encourage new investments in the Urea sector for setting up the gas based Urea
manufacturing units in the country. This will help in the achieving the goal of self-sufficiency. Further, the
key changes in comparison to NIP-2012 includes the separation of fixed and variable costs for greater
transparency, introduction of a viable Return on Equity (RoE) band with a floor at 12% and a ceiling at
16%, and mitigation of foreign exchange risk through conversion of fixed cost into INR after four years
based on prevailing exchange rates. These measures are estimated to result in savings of over Rs.250 crore
for each plant established under NIPU-2026 compared to NIP-2012.
Implementation Strategy and targets:
Setting up of new Urea manufacturing units will be covered under the National Investment Policy for
Urea-2026 for Atmanirbhar Bharat (NIPU-2026).
Background:
To attract New Investments in the Urea sector, a policy for investments in the Urea sector was finalised by
the Department of Fertilizers for Revamp, Expansion, Revival/Brownfield and Greenfield projects in
2012. Under New Investment Policy (NIP) – 2012, total 6 new Urea units have been set up which includes
4 urea units set up through Joint Venture Companies (JVC) of nominated PSUs and 2 urea units set up by
the private companies. The period for new investment under NIP-2012 expired by October-2019.
At present, there are 33 operational Urea manufacturing units with total Reassessed/installed capacity of
269.42 LMT. There is a need to increase the indigenous production of Urea. There is a gap in the
indigenous production and demand of urea in the country which is filled by the import of urea.
Department of Fertilizers have received various proposals for setting up of Urea units. Hence, a National
Investment Policy for Urea is necessary.
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