India Approves National Urea Investment Policy to End Import Reliance

The Union Cabinet and the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved the National Investment Policy for Urea-2026 (NIPU-2026) on July 15, 2026. Designed under the Atmanirbhar Bharat initiative, the policy aims to eliminate India's reliance on urea imports by adding approximately 10 million metric tonnes of domestic capacity.

The framework seeks to establish eight to nine new natural gas-based manufacturing plants, each with an annual capacity of roughly 1.27 million metric tonnes. Union Minister Ashwini Vaishnaw noted that this expansion will bridge the current supply gap, as India produces about 30 million tonnes annually against a demand of nearly 40 million tonnes. The policy also creates a pathway for integrating coal gasification to further enhance energy security.

Replacing a previous policy that expired in 2019, the new framework introduces three primary reforms: a return on equity band between 12% and 16%, the separation of fixed and variable costs for subsidy transparency, and the conversion of fixed costs into rupees after four years to mitigate foreign exchange risk. These measures are expected to save over Rs 250 crore per plant and potentially reduce the annual subsidy burden by more than Rs 10,500 crore.

Balasaheb Darade of the Gasification Technologies & Research Council of India described the capacity addition as imperative, citing that 82% of existing plants are more than 25 years old and domestic demand grows by nearly five percent annually.