Model Answer

India consumes around 40 million tonnes of urea annually, while domestic production is about 30 million tonnes, making imports necessary to bridge the gap. The recently approved National Investment Policy for Urea-2026 (NIPU-2026) seeks to promote domestic production through new gas-based urea plants and advance the goal of Atmanirbhar Bharat.

Significance of NIPU-2026

1. Promotes domestic production by encouraging investment in 8–9 new gas-based urea plants with an additional capacity of about 10 million tonnes.
2. Reduces import dependence, enhancing resilience against global supply disruptions and geopolitical shocks.
3. Strengthens food security by ensuring reliable fertiliser availability during critical agricultural seasons.
4. Improves investment attractiveness through a transparent return-on-equity framework and mitigation of foreign exchange risks for investors.
5. Reduces subsidy burden over time, with the revised framework expected to generate savings of over ₹250 crore per plant compared to the earlier policy.

Challenges to achieving self-reliance

1. Dependence on imported natural gas, the principal feedstock for gas-based urea production.
2. High fertiliser subsidy burden, limiting fiscal sustainability.
3. Imbalanced nutrient consumption, with excessive urea use relative to phosphatic and potassic fertilisers.
4. Environmental concerns, including emissions and declining soil health due to over-application of nitrogen.
5. Project implementation challenges, including land acquisition, gas infrastructure and timely commissioning.

Way Forward

1. Integrate NIPU-2026 with green ammonia and green hydrogen initiatives to reduce feedstock dependence.
2. Promote Nano Urea, Neem-Coated Urea and balanced fertilisation through the Soil Health Card Scheme.
3. Expand domestic natural gas infrastructure while rationalising fertiliser subsidies to improve long-term sustainability.

NIPU-2026 represents a significant step towards fertiliser self-reliance by expanding domestic production capacity. However, durable fertiliser security will depend on balancing production growth with energy security, sustainable nutrient management and fiscal prudence.