- Why in news
- On 15 July 2026 the Cabinet Committee on Economic Affairs approved the National Investment Policy for Urea-2026 (NIPU-2026), on the Department of Fertilizers' proposal. It covers new gas-based urea plants.
- What it is
- NIPU-2026 is a policy of the Department of Fertilizers for new urea manufacturing units. It replaces the New Investment Policy of 2012, whose window for new investment closed in October 2019. It aims at self-sufficiency in urea by reducing the gap between domestic output and demand, which is met by imports.
- Approving body
- The CCEA, chaired by the Prime Minister, approved the policy on the Department of Fertilizers' proposal.
- Return on Equity band
- A Return on Equity band with a floor of 12% and a ceiling of 16% is introduced.
- Cost separation and forex
- Fixed and variable costs are separated. Fixed cost is converted into INR after four years to reduce forex risk.
- Savings
- Savings of over Rs 250 crore per plant are expected compared with NIP-2012.
- NIP-2012 outcome
- Under NIP-2012, 6 new urea units were set up: 4 by joint venture companies of nominated PSUs and 2 by private companies.
- Current capacity
- There are 33 operational urea units with a total capacity of 269.42 LMT.
Don’t confuse with NIP-2012 vs NIPU-2026: NIP-2012 covered revamp, expansion, brownfield and greenfield projects and lapsed in 2019. NIPU-2026 is the new policy for new urea units with a RoE band and INR conversion of fixed cost.
Economy terms and data: 42 Prelims questions since 2013, rising in recent years; they test what a term or instrument means. In Mains, 12 news-triggered questions.
Why it matters
- Boosts domestic urea capacity and self-sufficiency, reducing import dependence.
- Transparent cost structure and an assured RoE band can attract private investment.
Problems
- Dependence on imported gas/LNG exposes plants to price and supply volatility.
- Urea remains subsidised and price-controlled, which strains the fiscal position.
Way forward
- Secure long-term gas supply and develop domestic gas infrastructure.
- Promote balanced fertiliser use, such as nano urea, to curb overuse of urea.
Put in your answer
Capacity data: India has 33 operational urea units with 269.42 LMT capacity, yet imports fill the demand gap.
NIP-2012 result: NIP-2012 produced 6 new units: 4 PSU joint ventures and 2 private.
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UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
Prelims practice · Statement I and II
Ours, not from a UPSC paper
Consider the following statements regarding the National Investment Policy for Urea-2026 (NIPU-2026):
- Statement-I: Under NIPU-2026, fixed cost is converted into INR after four years, based on prevailing exchange rates, to reduce foreign exchange risk.
- Statement-II: Under the earlier New Investment Policy of 2012, all six new urea units were set up by private companies.
Which one of the following is correct in respect of the above statements?
True or false?
1 of 4
Statements the way Prelims prints them. Say first, then see the fact.
1.Under NIP-2012, a total of 6 new urea units were set up, of which 4 were set up by private companies.
False. 4 were set up by JVCs of nominated PSUs and 2 by private companies.
2.The period for new investment under NIP-2012 expired in October 2019.
True. It expired by October 2019.
3.The policy was approved by the Cabinet Committee on Economic Affairs on the proposal of the Department of Agriculture and Farmers Welfare.
False. The proposal came from the Department of Fertilizers.
4.The gap between domestic urea production and demand in India is met through imports.
True. The shortfall is filled by imports.
Written by us from the release, not by UPSC; checked by a second model.
Worth revising until Prelims 2028: most news questions come within two years of the event.