FAI Backs NIPU-2026, Says Policy Will Support Domestic Urea Production
19 July 2026, New Delhi: The Fertiliser Association of India (FAI) has welcomed the Union Cabinet’s approval of the National Investment Policy for Urea-2026 (NIPU-2026), stating that the policy is expected to encourage fresh investment in domestic urea manufacturing and help reduce India’s dependence on imports.
India’s urea demand is increasing at an estimated 5% annually and is projected to reach nearly 40 million metric tonnes (MMT) in the coming years. Domestic production currently stands at around 30 MMT, with the country importing nearly 26% of its annual requirement. Under NIPU-2026, the government has approved the establishment of 8–9 new gas-based urea plants, which are expected to add approximately 10 MMT of production capacity and narrow the demand-supply gap.
The new policy replaces the National Investment Policy-2012 and introduces several measures aimed at improving the investment climate for urea manufacturing. These include a Return on Equity (RoE) of 12% to 16%, separate treatment of fixed and variable costs under the subsidy mechanism, and protection against foreign exchange fluctuations by converting fixed costs into Indian Rupees after four years. According to the government, the revised framework could result in lifecycle savings of more than ₹250 crore per plant, improving the financial viability of new projects across the public, private and cooperative sectors.
Commenting on the Cabinet’s decision, Dr. Siba Prasad Mohanty, Co-Chairman of the Fertiliser Association of India (FAI), said, “NIPU-2026 tackles the major structural challenge in India’s fertiliser sector—the gap between rising demand and static local capacity. This policy offers investors the confidence they need and paves the way for India to become fully self-reliant in urea production.”
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