India’s Fertiliser Sector Eyes Rs 90,000 Cr Capex Boost

India’s domestic urea sector is poised for a significant investment surge, with fertiliser firms expected to commit between Rs 80,000-90,000 crore in capital expenditure over the next six months.

This anticipated financial commitment, detailed in a recent ICRA report, follows the government’s New Investment Policy for Urea-2026 (NIPU-2026).

Driving Domestic Self-Sufficiency

The new investments are projected to substantially enhance India’s domestic urea self-sufficiency starting from 2030-31, aiming to lessen the country’s reliance on urea imports.

Projects approved under the NIPU-2026 are expected to reach commissioning within approximately 3.5 years of approval.

• Expected Capex: Rs 80,000-90,000 crore
• Project Commissioning Timeline: Around 3.5 years
• Improved Self-Sufficiency Target: From 2030-31

Addressing Import Dependence

India’s reliance on urea imports has steadily increased, reaching approximately 27% of total requirements in 2025-26.

This trend is attributed to several factors including a lack of significant capacity additions, consistent growth in consumption, and the decommissioning of some existing facilities.

• Domestic Urea Production Capacity: 30.6 MMTPA
• Estimated Demand (2025-26): Around 39.9 MMT
• Import Share (2025-26): Approximately 27% of total requirements

Policy Framework and Challenges

While the NIPU-2026 aims to boost domestic production, the ICRA report highlights a critical challenge: domestic urea manufacturing remains heavily dependent on imported natural gas.

To mitigate potential supply disruptions, similar to those observed during the West Asia crisis, a diversification of gas sourcing contracts will be essential.

The new policy also impacts project economics by implementing lower notified realisations for producers.

These planned investments are therefore crucial for India to bridge its demand-supply gap and reduce its strategic vulnerability in the fertiliser sector in the coming decade.