The GoI has notified the New Investment Policy for Urea-2026 (NIPU-2026) wherein the bands of RoE available for urea players have been reduced to 12%-16% with the fixed costs converted to INR component from the fifth year. While the policy economics have been tightened vis-à-vis the New Investment Policy-2012 (NIP-2012), ICRA expects the industry to commit Rs. 80,000- 90,000 crore of capex over the next 6 months with the plants expected to be commissioned in 3.5 years.

• India’s import dependence on urea continues to rise as there has been no capacity addition since FY2023, while consumption has grown at a steady pace and a few capacities totaling to ~1.9 MMTPA have been retired. India imported ~27% of its urea requirements in FY2026.
• Domestic production increased by 7.62 MMT between FY2019 and FY2025 with several new plants coming up under the New Investment Policy-2012 (NIP-2012). However, with the recent closure of two plants, the domestic production capacity has reduced to 30.6 MMTPA from a peak of ~32.4 MMTPA in FY2024, indicating significant shortfall against a urea demand of ~39.9 MMT in FY2026.