The government may soon approve eight new urea production plants as part of its efforts to expand domestic fertiliser production and reduce dependence on imports. The proposed plants are expected to involve investment of around Rs. 80,000 crore.
Applications received by the government include from public-sector companies, cooperatives and private-sector firms. According to senior government sources, the number of applicaions for new urea plants has risen to 14 following the announcement of the National Investment Policy for Urea-2026. A decision on the proposals is expected in October.
The new policy, approved by the Union Cabinet in July, 2026 is aimed at encouraging fresh investment in gas-based urea manufacturing. The policy seeks to add around 10 million tonnes of new domestic urea production capacity through eight to nine new plants.
Before the National Investment Policy for Urea-2026, the government had received seven applications for new urea plants. According to sources, the number has now increased to 14. The government may select eight of these applications for approval.
A new urea plant requires an investment of around Rs. 10,000 crore, which means approval of eight plants could result in investment of approximately Rs. 80,000 crore in the fertiliser sector. The government’s policy framework is intended to revive fresh investment in natural gas-based urea manufacturing after the earlier investment policy expired in 2019.
Two Urea Plants Proposed in Uttar Pradesh
Two of the proposed projects are in Uttar Pradesh. The state is already an important centre for urea production, with HURL operating its Gorakhpur unit and KRIBHCO Fertilisers Limited (KFL) operating a urea plant at Shahjahanpur.
A proposal for a second unit of Hindustan Urvarak & Rasayan Limited (HURL) at Gorakhpur could soon be submitted to the government, according to sources. The HURL Gorakhpur plant currently has annual urea production capacity of 1.27 million tonnes. Sources said HURL’s board has approved the expansion of its Gorakhpur urea plant few days back.
At Shahjahanpur, KRIBHCO Fertilisers Limited is also pursuing a new ammonia-urea project. Projects & Development India Limited (PDIL) has been working with KFL on the proposed project, which includes a 2,200 tonnes-per-day ammonia plant and a 3,850 tonnes-per-day urea plant.
GAIL Among Applicants
Among the companies that have applied for setting up new urea plants is public-sector gas company GAIL (India) Limited, which has submitted application for two plants, according to sources. Proposals from Chambal Fertilisers and Matix Fertilisers are also among those received by the government.
The new investment policy is intended to attract both greenfield projects and brownfield expansions and to encourage companies to add domestic gas-based urea capacity.
India Imports Around 10 Million Tonnes of Urea
India consumes around 40 million tonnes of urea annually, while domestic production is around 30 million tonnes, leaving a significant gap that is met through imports.
The dependence on imports became particularly challenging during the West Asia conflict in 2026. Urea prices rose sharply following disruptions around the Strait of Hormuz. India secured urea imports at prices of more than $900 per tonne during April, compared with around $500 per tonne in an earlier February tender. Such price and supply volatility has reinforced the government's focus on expanding domestic production.
Gas Supply Remains a Challenge
While increasing domestic urea production can reduce dependence on imports of finished fertiliser, gas remains a critical input for India's gas-based urea plants. The availability and cost of natural gas therefore remain important factors in determining the economics of new projects.
The West Asia conflict also highlighted this vulnerability. Industry data showed that reduced gas imports contributed to lower domestic urea production in March 2026, while international prices rose sharply during the disruption. Current price of gas is around $ 22 per mmbtu.
Urea Demand Expected to Rise
India's urea consumption has been rising steadily and is expected to continue increasing as agricultural demand grows. The government has therefore targeted additional domestic capacity to bridge the gap between production and consumption.
However, some fertiliser industry executives have told Rural Voice that the new investment policy is not particularly attractive and offers only a limited improvement over the previous policy. At the same time, companies already operating in the fertiliser sector may still find the new framework sufficient to justify investments in additional production capacity.