India currently has 33 operational urea manufacturing units with a reassessed installed capacity of 269.42 LMT (File Photo)The Union Cabinet Wednesday approved the National Investment Policy for Urea-2026 (NIPU-2026), a new framework to encourage investment in gas-based urea manufacturing units and increase domestic production.The government, in a press release, said the policy aims to achieve the goal of self-sufficiency under the Atmanirbhar Bharat initiative. The new policy introduces several changes over the earlier New Investment Policy (NIP)-2012., whose investment window ended in October 2019.Key features of the policyThe new policy separates fixed and variable costs in the pricing framework. It introduces a return on equity (RoE) band with a minimum of 12% and a maximum of 16%. It also addresses foreign exchange risk by converting fixed costs into rupees after four years based on the prevailing exchange rate.The government said these changes will improve transparency and save more than Rs 250 crore for every plant set up under NIPU-2026 compared with projects approved under NIP-2012.Focus on domestic productionThe Department of Fertilizers will cover new gas-based urea manufacturing units under NIPU-2026. The government said the policy will support new investments and help increase domestic urea production to narrow the gap between demand and supply.India currently has 33 operational urea manufacturing units with a reassessed installed capacity of 269.42 lakh metric tonnes (LMT). The country continues to import urea to meet domestic demand.Why the new policyThe Department of Fertilizers introduced the New Investment Policy in 2012 to promote investment in revamp, expansion, revival, brownfield and greenfield urea projects.Story continues below this adUnder NIP-2012, companies set up six new urea plants, including four through joint ventures of public sector companies and two by private firms. After the policy’s investment period ended in 2019, the Department of Fertilizers received fresh proposals to establish new urea units, prompting the government to bring in NIPU-2026, the release reads.