Chandigarh, July 17: 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 ₹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.