The Indian government is developing a new urea investment program to close a supply deficit of about 100 lakh metric tonnes (LMT). A Cabinet note is currently being discussed inter-ministerially, with the goal of incentivizing new capacity while clarifying subsidies in a price-controlled market.
The proposed framework is likely to set floor and ceiling subsidy rates for up to eight years, reassuring investors concerned about fixed retail pricing and changing production costs. India’s current urea demand is around 400 LMT, while local output is around 300 LMT, resulting in a 20-25% gap covered by imports.
The policy may be modeled after the New Investment Policy (NIP)-2012, which resulted in the development of six facilities and significant capacity expansion. According to the new proposal, corporations may be obliged to commission plants within four years.
However, officials warn that gas supply remains a major issue. Rising worldwide prices are projected to exceed the ₹1.7 lakh crore planned for fertiliser subsidies in FY27.
The move reflects efforts to increase self-sufficiency in fertilizer production while managing fiscal constraints.
Source – Moneycontrol
