GAIL (India) and Krishak Bharati Cooperative (KRIBHCO) have entered into a partnership agreement with the Andhra Pradesh Economic Development Board to explore establishing a major urea manufacturing facility in the southern Indian state. According to reports from Business Standard, the proposed project represents a significant investment in India's fertilizer sector, with the companies announcing the collaboration on Thursday. The partnership will be formalized through a memorandum of understanding (MoU) with the Andhra Pradesh Economic Development Board.
The proposed facility involves setting up a 1.27-million-ton-per-year urea plant at Mulapeta in Andhra Pradesh's Srikakulam district. As reported by Business Standard, the total investment requirement for this project stands at approximately ₹13,500 crore ($1.6 billion) and will be implemented in phases. KRIBHCO, described as one of India's biggest fertiliser cooperatives, manufactures and markets urea and other crop nutrients, making it a suitable partner for this large-scale industrial venture.
The urea plant project is expected to generate substantial employment opportunities in the region. According to the companies' announcement, the facility could create 1,300 total jobs, including 300-400 direct jobs and around 1,000 indirect jobs during its operational phase. The state government will provide comprehensive support for the project, facilitating land acquisition, infrastructure development, and potential incentives to ensure the project's successful implementation. The project will require approximately 600-700 acres of land for establishment.
The Andhra Pradesh government will facilitate the investment through tailor-made incentives, including a fixed capital subsidy, an interest-free loan for project capital expenditure, and a 100% refund of state GST. As reported by Moneycontrol, the government will also allot land at a nominal cost and provide essential infrastructure, including roads, electricity, water and railway connectivity, 'till the doorsteps of the project without any cost. This support comes amid the Centre's recent approval of the National Investment Policy for Urea-2026 to boost domestic urea production and reduce import dependence, with India currently importing nearly 27% of its annual urea requirement of around 40 million tonnes.
The urea project announcement comes as fertilizer demand has increased amid El Niño conditions and concerns have been raised over the excessive use of chemical fertilizers. According to an assessment by ICRA, fertilizer companies could commit ₹80,000-90,000 crore in fresh investments in the country. The project aligns with the government's strategy to reduce import dependence and strengthen domestic fertilizer manufacturing capabilities, positioning Andhra Pradesh as a key destination for large-scale industrial development alongside other major investments including Google's planned $15 billion AI hub and Reliance Industries' proposed $11 billion investment.
