The Cabinet Committee on Economic Affairs has approved a Novel Urea Investment Policy to Increase Domestic Manufacturing and Reduce Reliance on Imports

On 16 July 2026, the National Investment Policy for Urea-2026 focuses on boosting domestic production, building 8–9 new gas plants, and reducing imports approved by the Cabinet Committee on Economic Affairs. This initiative targets to enhance fertilizer self-sufficiency, improve cost transparency, attract investments, and secure supply chains.The Cabinet Committee on Economic Affairs (CCEA) approved the National Investment Policy for Urea-2026 (NIPU-2026), supporting the Atmanirbhar Bharat initiative. This reform focuses on boosting India's fertilizer industry, reducing urea imports, and encouraging the construction of new gas-based urea plants. Plans include 8-9 new facilities producing about 12.7 lakh metric tonnes each annually, nearly one crore metric tonnes in total, bringing India closer to self-sufficiency.

NIPU-2026 improves over NIP-2012 by clarifying costs, setting a 12-16% return on equity, and converting fixed costs to rupees after four years, potentially saving over ₹250 crore per plant and making projects more adaptable. India’s current capacity of 269.42 lakh metric tonnes cannot meet demand, attract investments, strengthen the supply chain, and increase resilience against global disruptions. The policy supports capacity expansion, reduces forex outflows, enhances food security, promotes domestic manufacturing, and ensures fertilizer supply.

Impact on the Fertilizer Industry

The global fertilizer market size is expected to be valued at USD 214.10 billion in 2025 and is predicted to increase from USD 220.31 billion in 2026 to approximately USD 284.58 billion by 2035, expanding at a CAGR of 2.89% over the forecast period from 2026 to 2035.

According to Precedence Research, the trend towards reducing foreign exchange risks improves project economics, making long-term investments. The approval of NIPU-2026 is set to transform India's fertilizer infrastructure by attracting investments in gas-based urea plants, boosting demand for process engineering, ammonia synthesis, catalysts, and gases. The transparent pricing system and clear return on equity increase investor preference through private-sector involvement. 

NIPU-2026 enhances India's fertilizer ecosystem, boosts industrial competitiveness, and supports next-generation investments, aligning with the commitments of self-reliance in strategic inputs. The policy promotes domestic value addition by lowering reliance on imported urea, strengthening supply chain resilience, and streamlining manufacturing. It may lead to capacity expansion by existing producers and major infrastructure projects by EPC firms. Expanding local manufacturing could also foster energy-efficient fertilizer technology and lower-carbon ammonia research. Overall, Demand for compressors, reactors, heat exchangers, automation, coatings, and chemicals will rise during construction and operation.

Impact on the Soil Management Industry

The global soil management market size accounted for USD 26.36 billion in 2025 and is predicted to increase from USD 27.68 billion in 2025 to approximately USD 42.94 billion by 2035, expanding at a CAGR of 5.00% from 2025 to 2035.

According to Precedence Research, focusing on soil quality and long-term health, as well as on enhanced local urea supplies, provides a more secure foundation for India's future food needs. It streamlines CCEA approval, supports government commitment to improving inventory, and boosts higher yields across crops, boosting farm productivity and rural incomes.

India's agriculture benefits from increased domestic urea production, ensuring a consistent fertilizer supply during sowing, reducing reliance on imports, and minimizing the risks posed by global disruptions. Domestic manufacturing saves foreign exchange, enabling more domestic investment in soil management and agriculture, and promoting sustainable growth.

Impact on the Renewable Natural Gas Industry

The global renewable natural gas market size is valued at USD 15.72 billion in 2025 and is predicted to increase from USD 17.04 billion in 2026 to approximately USD 34.90 billion by 2035, expanding at a CAGR of 8.30% from 2026 to 2035.

According to Precedence Research, the energy sector is moving towards increased demand for renewable natural gas, as new gas-based urea plants rely on natural gas. This investment leads to higher long-term gas consumption and investments in LNG infrastructure, pipelines, and distribution networks. The adoption of gas technologies supports industrial energy efficiency and reduces carbon emissions.

The national investment policy for urea-2026 links energy and fertilizer security, fostering industrial growth and reliable energy sources. Gas suppliers, pipeline and LNG terminal operators, and energy partnerships could benefit from the rise in fertilizer-related industrial demand, boosting opportunities for upstream and midstream companies and expanding India's gas infrastructure. Overall, NIPU-2026 presents new opportunities in the renewable infrastructure and promotes cleaner, sustainable industrial energy in India.

Expert Opinion

According to expert opinion, the National Investment Policy for Urea-2026 highlights structural financial reforms to enhance transparency and improve project viability, thereby creating a stable environment for investment. The Atmanirbhar Bharat goal is to foster self-reliance and reduce foreign exchange outflows. This investment fueling domestic urea production increases supply resilience and lowers vulnerability to global price swings.

NIPU-2026 targets to strengthen India's fertilizer sector, make substantial investments, develop energy infrastructure, and enhance agricultural security, potentially making India self-sufficient and benefiting renewable sectors.  Success relies on CCEA approvals, gas supplies, clearances, infrastructure, and execution to increase output, boost sustainable agriculture, and improve fertilizer security.