- Deepak Fertilisers shares rose over 6% after Union Cabinet approved new urea policy
- New National Investment Policy for Urea-2026 aims to boost domestic urea production
- Policy introduces cost separation, RoE band, and forex risk mitigation measures
Deepak Fertilisers & Petrochemicals Corporation shares rallied over 6% in Thursday's trade after the Union Cabinet approved a new investment policy aimed at boosting domestic urea production.
The stock surged as much as 6.49% to an intraday high of Rs 1,643.10 per share on the BSE. At 11 am, Deepak Fertilisers was trading 4.65% higher at Rs 1,614.65, outperforming the BSE Sensex, which was up 0.48% at 77,556.
What Triggered The Rally?
The rally followed the Cabinet Committee on Economic Affairs' approval of the National Investment Policy for Urea-2026 for Atmanirbhar Bharat (NIPU-2026), a policy aimed at attracting fresh investments in India's urea manufacturing sector and reducing the country's dependence on imports.
The policy seeks to encourage the setting up of new gas-based urea manufacturing units, supporting the government's goal of achieving self-sufficiency in urea production.
Key Features Of NIPU-2026
Compared with the earlier New Investment Policy (NIP)-2012, the new framework introduces several structural changes aimed at improving project viability and transparency. These include:
- Separation of fixed and variable costs for greater transparency.
- Introduction of a return on equity (RoE) band with a floor of 12% and a ceiling of 16%.
- Mitigation of foreign exchange risk by converting fixed costs into Indian rupees after four years based on prevailing exchange rates.
According to the government, these measures are expected to generate savings of over Rs 250 crore per plant established under NIPU-2026 compared with projects approved under NIP-2012.
Why The New Policy Matters
India currently has 33 operational urea manufacturing units with a total installed capacity of 269.42 lakh metric tonnes (LMT). However, domestic production continues to fall short of demand, making the country reliant on imports to bridge the gap.
The government said it has received multiple proposals for setting up new urea plants, necessitating a fresh investment policy after the earlier NIP-2012 expired in October 2019.
Under NIP-2012, six new urea plants were commissioned, including four through joint ventures involving public sector companies and two by private firms.
With NIPU-2026 now in place, the government expects fresh investments in domestic urea production, helping improve long-term supply security while reducing import dependence.
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