The Indian government has introduced several policies to enhance self-sufficiency in the urea and fertilizer sector, including the New Investment Policy (NIP) – 2012 and its amendment in 2014. These initiatives have led to significant expansion in domestic urea production, as well as increased capacity for other fertilizers to support the agriculture sector.
New Urea Units and Capacity Expansion
Under the NIP-2012, six new urea units have been established, with four units set up by joint ventures involving public sector undertakings (PSUs) and two by private companies. The joint venture units include Ramagundam Fertilizers and Chemicals Ltd. (Telangana) and three units under Hindustan Urvarak & Rasayan Ltd. (HURL) in Gorakhpur (Uttar Pradesh), Sindri (Jharkhand), and Barauni (Bihar). The private units are Matix Fertilizers in Panagarh (West Bengal) and Chambal Fertilizers in Gadepan (Rajasthan).
Each unit has an installed capacity of 12.7 lakh metric tonnes per annum (LMTPA), adding a total of 76.2 LMTPA to India’s urea production. As a result, the country’s reassessed urea production capacity has increased from 207.54 LMTPA in 2014-15 to 283.74 LMTPA in 2023-24. Additionally, the Talcher Fertilizers Limited project in Odisha will use coal gasification technology to further contribute to the sector’s growth.
Maximizing Urea Production under NUP-2015
In 2015, the government introduced the New Urea Policy (NUP-2015), aimed at maximizing production from the country’s 25 gas-based urea units. The policy has led to an annual increase of 20-25 lakh metric tonnes of urea production beyond previous capacity levels. Urea production has reached a record 314.07 LMT in 2023-24, up from 225 LMT in 2014-15.
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Measures for Phosphatic and Potassic Fertilizers
The government introduced the Nutrient Based Subsidy (NBS) policy in 2010 to support the production and supply of phosphatic and potassic (P&K) fertilizers. This policy provides fixed subsidies based on nutrient content. It aims to stabilize domestic production in the P&K sector.
To reduce reliance on imports, the government has recognized new manufacturing units under the NBS scheme. It has also promoted indigenously produced fertilizers like Potash Derived from Molasses (PDM) and Single Super Phosphate (SSP).
These initiatives have contributed to an increase in India’s total fertilizer production. Output rose from 385.39 LMT in 2014-15 to 503.35 LMT in 2023-24.
Significance for Agriculture
According to the Economic Survey 2024-25, agriculture supports 46.1% of the population and contributes 16% to India’s GDP. Fertilizers, along with water and seeds, are essential for achieving higher agricultural productivity.
The government’s efforts to boost domestic fertilizer production aim to support the agricultural sector. These measures also focus on reducing dependence on imports to build a more self-reliant economy.
