Cabinet Approves National Investment Policy for Urea-2026 (NIPU-2026) for Atmanirbhar Bharat
UPSC / SSC current affairs note · IR
Why in news
The Union Cabinet, chaired by PM Modi, has approved the National Investment Policy for Urea-2026 (NIPU-2026) to boost domestic urea production and reduce import dependence. This policy replaces the earlier NIP-2012 and introduces key changes to attract new investments in gas-based urea manufacturing units.
Background
India has a gap between domestic urea production and demand, met through imports. In 2012, the Department of Fertilizers formulated the New Investment Policy (NIP-2012) to revive, expand, and set up new urea units. Under NIP-2012, six new urea units were established. The investment period ended in October 2019. Currently, 33 urea units are operational with a total reassessed/installed capacity of 269.42 LMT.
Key facts
The Cabinet Committee on Economic Affairs (CCEA) approved the proposal for NIPU-2026 on 15 July 2026.
NIPU-2026 aims to promote new investment in the urea sector for setting up gas-based urea manufacturing units.
Key changes from NIP-2012 include: separation of fixed and variable costs for transparency, introduction of a viable return on equity (ROE) band with a floor of 12% and ceiling of 16%, and conversion of fixed cost to INR after four years based on prevailing exchange rates to reduce foreign exchange risk.
These measures are estimated to save over ₹250 crore per plant under NIPU-2026 compared to NIP-2012.
The policy covers establishment of new urea manufacturing units under the Atmanirbhar Bharat initiative.
Under NIP-2012, six new urea units were set up: four by joint venture companies of nominated PSUs and two by private companies.
Currently, 33 urea units are operational with a total capacity of 269.42 LMT.
India's domestic urea production is insufficient to meet demand, necessitating imports.
Prelims pointers
- NIPU-2026: National Investment Policy for Urea-2026
- CCEA: Cabinet Committee on Economic Affairs
- Atmanirbhar Bharat
- NIP-2012: New Investment Policy 2012
- ROE band: 12% floor, 16% ceiling
- Gas-based urea manufacturing
- Department of Fertilizers
- Urea units: 33 operational, capacity 269.42 LMT
Mains angles
- Discuss the significance of NIPU-2026 in achieving self-reliance in urea production and its impact on India's fertilizer sector.
- Critically examine the changes introduced in NIPU-2026 compared to NIP-2012 and their potential to attract investment.
- Analyze the role of government policies in reducing import dependence in the fertilizer sector and ensuring food security.