India’s reliance on urea imports is projected to drop to 10-15%, down from a high of 30% in FY 2021, according to a Crisil Ratings study. This reduction is driven by the launch of new urea production capacities. These plants are expected to achieve regulated returns as utilization rates improve. Additionally, older plants will maintain stable profits due to steady raw material costs and supportive government policies.
India’s urea industry is expected to benefit from stable subsidies and financial health, with Crisil Ratings reporting progress toward self-sufficiency. The sector’s import dependency, which rose to 20-25% between FY 2007 and FY 2012, is being reduced by the New Investment Policy 2012 (NIP 2012). This policy has led to six new plants, adding 7.62 million tons of capacity over five years.
Anand Kulkarni, Director at Crisil Ratings, credits NIP 2012 for reducing imports, with full-capacity operations expected this fiscal year. New plants will see increased profitability with a 12% return on equity, while the rest of the industry will maintain stable returns due to steady gas prices and government policies.
The sector remains reliant on subsidies, which account for 80-85% of sales, but with a budget of ₹1.19 lakh crore, no major subsidy shortfalls are expected this year.
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