Rating agency ICRA in its latest report has said that India’s domestic urea sector is set for fresh investment cycle, with fertiliser firms are likely to commit Rs 80,000-90,000 crore of capital expenditure (capex) over the next six months. It noted that the expected investment follows the government’s New Investment Policy for Urea-2026 (NIPU-2026). It said projects approved under the policy are expected to be commissioned within around 3.5 years.
According to the report, the new investments are expected to materially improve domestic urea self-sufficiency from 2030-31 by reducing the country’s dependence on urea imports. However, it said domestic urea production remains heavily reliant on imported natural gas, and diversification of gas sourcing contracts will be critical to avoid disruptions similar to those seen during the West Asia crisis. The new policy tightens project economics primarily through lower notified realisations.
The report further stated that India’s dependence on urea imports has continued to increase, with imports accounting for around 27% of total requirements in 2025-26. This is largely due to the absence of significant capacity additions over the last couple of years, steady growth in consumption, and the retirement of few capacities. With domestic urea production capacity at 30.6 MMTPA against demand of around 39.9 MMT in 2025-26, new investments are expected to significantly improve self-sufficiency from 2030-31 onwards.
