Cabinet OKs National Investment Policy for Urea 2026 to boost domestic output
This story was originally published at 16:41 IST on 15 July 2026
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--Cabinet OKs National Investment Policy for Urea 2026
MUMBAI – The Union Cabinet Wednesday approved the National Investment Policy for Urea – 2026 to encourage new investments to set up gas-based urea manufacturing units in the country and reduce import dependence. Under the new policy, the government has introduced many key changes, including subsidy calculation, compared to the previous National Investment Policy for Urea – 2012.
The policy will separate fixed and variable costs to ensure greater transparency in subsidy calculation. It will also rationalise fixed costs for greenfield and brownfield projects, resulting in an estimated saving of over INR 2.5 billion per plant established under the National Investment Policy for Urea – 2012, Minister of Information and Broadcasting Ashwini Vaishnaw said in a briefing Wednesday.
In the last decade, six new plants with a capacity of 1.27 million tonnes each were established. The annual demand for urea is growing at 5% per annum.
The government will introduce an assured return on equity of 12-16% for urea companies. To mitigate foreign exchange risk, the new policy enables fixed costs in dollars to be converted into rupees after four years based on prevailing exchange rates, protecting investors and the government from volatility in currency markets.
Global urea prices have increased three-four times since 2018, but the Indian government has kept prices largely steady for farmers. The government provides urea at a low price of INR 242 per bag ( 1 bag = 45 kilograms), Vaishnaw said. End
Reported by Afra Abubacker
Edited by Avishek Dutta
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