Cabinet approves National Investment Policy for Urea 2026 (NIPU-2026)

📌 Summary:

• Union Cabinet (July 15, 2026) approved the National Investment Policy for Urea-2026 (NIPU-2026) to encourage investment in gas-based urea manufacturing units and raise domestic production
• Aims at self-sufficiency under the Atmanirbhar Bharat initiative; replaces the earlier New Investment Policy (NIP)-2012 whose investment window ended in October 2019
• Key changes: separates fixed and variable costs in the pricing framework; introduces a Return on Equity (RoE) band with a minimum of 12% and a maximum of 16%; addresses forex risk by converting fixed costs into rupees after four years at the prevailing exchange rate
• Government says the changes improve transparency and save over Rs 250 crore per plant compared with NIP-2012 projects
• India has 33 operational urea units with reassessed installed capacity of 269.42 LMT and still imports urea to meet demand
• Under NIP-2012, six new urea plants were set up (four via PSU joint ventures, two private)

🎯 UPSC Relevance: GS3 — fertiliser policy and subsidy, food security, self-reliance in agri-inputs, and reducing urea import dependence.

📝 Prelims Facts:

• NIPU-2026 covers new gas-based urea units under the Department of Fertilizers
• RoE band: 12% (min) to 16% (max); fixed costs converted to rupees after 4 years
• India: 33 urea units; installed capacity 269.42 LMT (lakh metric tonnes)

🔑 Key Term: Return on Equity (RoE) band — a regulated minimum-maximum return allowed on invested equity, used to keep projects viable while containing the subsidy burden.