National Investment Policy for Urea-2026

The Union Cabinet approved the National Investment Policy for Urea-2026 on 15 July 2026. The policy covers domestic urea manufacturing, investment incentives, and capacity expansion in India’s fertiliser sector.

Urea production in India

Urea is a nitrogenous fertiliser used widely in Indian agriculture. India’s domestic urea production is about 30 million tonnes a year, while annual requirement is about 40 million tonnes. India imports about 10 million tonnes of urea every year to meet demand.

Key features of NIPU-2026

The policy aims to add 10 million tonnes, or 1 crore metric tonnes, of urea production capacity. It provides a framework for 8 to 9 new natural gas-based urea manufacturing plants across the country. The policy also provides assured returns on equity in the range of 12% to 16%. The framework includes a transparent cost structure and measures to reduce foreign exchange risk. After four years, fixed costs are to be converted into Indian rupees under the policy design.

Previous policy framework

NIPU-2026 extends and revises the New Investment Policy, 2012. The earlier policy expired in October 2019. The new policy is intended to support fresh investment in domestic urea manufacturing after the expiry of the earlier framework.

Important Facts for Exams

• Urea is the most widely used nitrogen fertiliser in India.
• Natural gas is the main feedstock for most modern urea plants.
• Coal gasification is a process that converts coal into synthesis gas for industrial use.
• Assured return on equity is a policy tool used to attract private investment in infrastructure and manufacturing.

Policy and sector context

The policy is linked to India’s fertiliser self-reliance goals and domestic industrial capacity. It also provides a pathway for gradual integration of coal gasification into the urea sector.