New Urea Policy 2015




Urea has been understood to be an essential nitrogen-based fertiliser for agriculture being produced in India since 1959 (Food and Agriculture Organisation, 2005). As early as 1977, the Indian government put the Retention Pricing Scheme (RPS) in place under which the government fixed a price for each unit. The difference between this uniform sale price and varying cost of production across manufacturing plants of urea was paid as subsidy. Later in 2003, the RPS was replaced by the New Pricing Scheme (NPS) with the objectives of higher transparency, uniformity and to increase disbursements of subsidy payments to urea units (Chander, 2013). However, the promises were poorly realised despite consecutive amendments in the NPS till 2015. Thereafter, the need for a new intervention was felt. Thus, the New Urea Policy (NUP) was introduced in 2015 with the aim to enhance indigenous urea products, promoting energy efficiency, rationalising subsidy burden and incentivising manufacturing units to increase their production capacities.


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