Two new urea plants in Talcher and Ramagundam will start production soon, cutting India's fertiliser import bill by roughly ₹5,000 crore annually, the government said.
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The government announced that two new urea plants will begin production soon, a move officials said would reduce India's reliance on imported fertiliser. The plants, located in Talcher and Ramagundam, are expected to add capacity that could cut the country's annual import bill by roughly ₹5,000 crore, according to the Ministry of Chemicals and Fertilizers.
India imports about 30% of its urea needs, a figure that has fluctuated with global gas prices and domestic production shortfalls. The new units, both coal-gasification-based, are designed to produce 1.27 million tonnes per year each. The Talcher plant, a joint venture between GAIL, Coal India, RCF, and FCIL, has faced repeated delays since its 2016 approval. The Ramagundam plant, operated by NFL, is closer to completion.
Fertiliser subsidy spending has been a persistent fiscal pressure point. In the 2024-25 budget, the government allocated ₹1.64 lakh crore for fertiliser subsidies, down from ₹1.88 lakh crore the previous year as global prices softened. Officials said the new capacity would help stabilise domestic supply and reduce exposure to volatile international markets.
The announcement comes ahead of the kharif sowing season, when urea demand typically peaks. India's fertiliser consumption has risen steadily, with urea accounting for roughly 55% of total nutrient use. The government has also pushed for neem-coated urea and direct benefit transfers to curb diversion and improve farm-gate availability.
For companies in the fertiliser sector, the new capacity could shift competitive dynamics. Domestic producers like Coromandel International, Chambal Fertilizers, and Deepak Fertilizers have benefited from import substitution policies. Additional domestic supply may compress margins for import-dependent players while supporting volume growth for those with access to gas-based production.
The coal-gasification route carries its own risks. These plants require consistent coal supply and face higher capital costs than gas-based units. Past coal-gasification projects in India have struggled with technical hurdles and cost overruns. The government has offered viability gap funding to make the economics work.
A ministry official said the plants would be commissioned in phases through the next 12 to 18 months. No specific date was given for the first output.
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