The Green Urea Expression of Interest (EOI), recently issued by Projects and Development India Limited (PDIL) on behalf of the Department of Fertilisers, may appear procedural. Yet it could mark the beginning of a new phase in India’s industrial policy. More than an exercise in market consultation, it signals that the government is exploring the use of public procurement to create an entirely new market for a clean industrial product.
For India’s fertiliser sector, this is significant. Until now, commercial deployment of green urea remained uncertain because the Department of Fertilisers, which ultimately determines project bankability through pricing, procurement and subsidy policies, had not established a formal procurement pathway. The EOI is the first institutional signal that green urea is being considered within the country’s existing fertiliser procurement architecture.
Whether this becomes a genuine policy inflection point will depend on what follows. An EOI is only a request for information; it neither guarantees demand nor establishes pricing or subsidy mechanisms. But if it is followed by a credible procurement framework, assured offtake and transitional investment support, it could lay the foundation for India’s next major fertiliser transformation.
Why India’s Fertiliser Model Needs Reimagining
India’s fertiliser economy remains deeply exposed to international energy markets. In FY 2025–26, the country imported nearly 11 million tonnes of urea, spending around USD 5.2 billion in foreign exchange. Domestic production consumes roughly 17 billion cubic metres of natural gas annually, accounting for nearly 29 percent of India’s total gas consumption, around 85 percent of which is imported. Every increase in international gas or fertiliser prices therefore translates directly into higher production costs, greater import dependence and larger subsidy burdens.
This dependence carries a substantial fiscal cost. Fertiliser subsidies remain one of the Union Government’s largest expenditure items. In FY 2025–26, actual subsidy expenditure reached approximately ₹2.11 lakh crore, substantially exceeding the revised estimate of ₹1.86 lakh crore. Reducing this structural dependence is therefore not only an energy security objective but also a long-term fiscal imperative.
Green Urea Changes More Than the Feedstock
Green urea replaces fossil-derived hydrogen with green hydrogen while producing the same fertiliser that farmers already use. That makes it one of the few industrial products capable of simultaneously advancing agricultural resilience, energy security and industrial decarbonisation without requiring changes in downstream consumption.
Its strategic importance extends well beyond fertiliser production. At scale, green urea could become one of India’s largest industrial consumers of green hydrogen while simultaneously creating commercial demand for captured carbon dioxide. Few other sectors have the potential to accelerate two emerging industries through a single product. In that sense, green urea represents an important convergence between the National Green Hydrogen Mission, industrial carbon management and fertiliser policy.
Five years ago, green urea was largely viewed as commercially aspirational. Today, declining renewable electricity costs, improving electrolyser technologies and advances in carbon capture are steadily narrowing the cost gap. Commercial viability is becoming less a technological question than one of policy design and market creation.
Procurement Is the Missing Market
The principal challenge is no longer technological feasibility but commercial certainty. Investors do not finance technologies; they finance predictable revenue streams. Conventional urea already operates within an administered pricing and subsidy regime, but green urea has no corresponding commercial pathway. Without clarity on procurement, pricing and long-term offtake, even technically viable projects remain difficult to finance.
This gives the Department of Fertilisers an unusually decisive role. Unlike many clean technologies that depend primarily on consumer adoption, green urea will emerge within a market that government already regulates through procurement and subsidy policy. The transition therefore depends less on creating demand from farmers than on creating investment confidence for producers.
Early commercial projects are likely to require transitional support through viability gap funding, concessional finance or targeted capital assistance until economies of scale reduce production costs. Such support should be viewed not as a permanent subsidy but as an investment in establishing a competitive domestic industry.
Market creation will also require enabling infrastructure. Reliable supplies of renewable electricity, green hydrogen and captured carbon dioxide must develop alongside production capacity. India has substantial opportunities to source carbon dioxide from ethanol plants, fertiliser units and other industrial clusters, but shared transport and utilisation infrastructure will be essential to avoid fragmented project-level solutions. Equally important will be a robust certification framework based on lifecycle emissions to ensure market credibility and facilitate future exports.
From Institutional Signal to Industrial Strategy
The Green Urea EOI represents an important institutional signal, but it is only the beginning. Translating interest into investment will require a transparent procurement mechanism, assured long-term offtake, clear pricing principles and a phased deployment roadmap with measurable capacity targets. These are the policy instruments that transform expressions of interest into investable markets.
If implemented effectively, the significance of the Green Urea EOI will extend beyond fertiliser. It could establish a template for how India commercialises future clean industrial technologies – using public procurement not simply to purchase products, but to create entirely new markets. Success would reduce import dependence, strengthen energy security and accelerate industrial decarbonisation, while demonstrating that procurement policy can be as important to the energy transition as technological innovation itself.