The Fertiliser Association of India (FAI) has welcomed the Union Cabinet's approval of the National Investment Policy for Urea-2026 (NIPU-2026), calling it a significant step towards achieving self-sufficiency in domestic urea production. Currently, India’s demand is increasing at nearly 5% annually and is expected to reach 40 million metric tonnes (MMT), while domestic output stands at about 30 MMT. The country imports approximately 26% of its annual urea needs. The Cabinet's directive to establish 8-9 new gas-based plants, which will add 10 MMT of local capacity, provides the infrastructure needed to bridge this gap and work toward complete self-sufficiency.
NIPU-2026 introduces a secure Return on Equity (RoE) range of 12% to 16%, distinguishes between fixed and variable costs for subsidy purposes, and protects investors from currency fluctuations by converting fixed costs into INR after 4 years. Replacing the earlier NIP-2012 framework, these reforms provide clearer regulatory guidance. The Cabinet estimates that these changes will result in lifecycle savings of over Rs 250 crore per plant, enhancing the financial viability of new capacity across public, private, and cooperative sectors.
"NIPU-2026 tackles the major structural challenge in India's fertiliser sector - the gap between rising demand and static local capacity," stated, Dr Siba Prasad Mohanty, the Co-Chairman of the Fertiliser Association of India (FAI). "This policy offers investors the confidence they need and paves the way for India to become fully self-reliant in urea production."
FAI applauds Prime Minister Narendra Modi and the Department of Fertilisers, Ministry of Chemicals & Fertilisers, for their timely and visionary approach, which shields Indian agriculture from global supply disruptions and bolsters long-term food and fertiliser security.