UPSC Prelims Practice Questions — What is India’s policy on urea production?

Q1. Which one of the following correctly describes the pricing regime administered by the Department of Fertilizers for urea, as distinct from that for phosphatic and potassic (P&K) fertilizers?

  • A. Urea is sold at a Maximum Retail Price statutorily notified by the Union Government, whereas P&K fertilizers are covered by the Nutrient Based Subsidy scheme with a fixed per-nutrient subsidy
  • B. All chemical fertilizers sold in India, including P&K fertilizers, carry Maximum Retail Prices statutorily notified by the Union Government every season
  • C. Urea and P&K fertilizers are both entirely decontrolled, with subsidy paid solely on the basis of nutrient content notified annually by the Union Government
  • D. Urea is fully decontrolled in price, while only P&K fertilizers such as DAP carry a Maximum Retail Price statutorily notified by the Union Government

Q2. Which one of the following fertilizers is sold to farmers at a subsidised Maximum Retail Price of Rs. 242 per 45 kg bag, which has remained unchanged since 1 March 2018?

  • A. Di-Ammonium Phosphate, subsidised under the Nutrient Based Subsidy scheme
  • B. Muriate of Potash, subsidised under the Nutrient Based Subsidy scheme
  • C. Urea, subsidised under the Urea Subsidy Scheme
  • D. NPK complex fertilizer, subsidised under the Nutrient Based Subsidy scheme

Q3. The proposal for the National Investment Policy for Urea-2026 (NIPU-2026), cleared by the Cabinet Committee on Economic Affairs in July 2026, was moved by which one of the following?

  • A. Department of Agriculture and Farmers Welfare, Ministry of Agriculture and Farmers Welfare
  • B. Department of Fertilizers, Ministry of Chemicals and Fertilizers
  • C. Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers
  • D. Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry

Q4. With reference to the National Investment Policy for Urea-2026 (NIPU-2026) as compared with the New Investment Policy (NIP)-2012, consider the following statements: 1. NIPU-2026 separates the fixed cost and variable cost components of urea production to enhance transparency in pricing. 2. NIPU-2026 provides a Return on Equity band with a floor of 12 per cent and a ceiling of 16 per cent. 3. NIPU-2026 requires that all new urea capacity created under it be based exclusively on coal gasification, discontinuing the feedstock route permitted under NIP-2012. Which of the statements given above is/are correct?

  1. NIPU-2026 separates the fixed cost and variable cost components of urea production to enhance transparency in pricing.
  2. NIPU-2026 provides a Return on Equity band with a floor of 12 per cent and a ceiling of 16 per cent.
  3. NIPU-2026 requires that all new urea capacity created under it be based exclusively on coal gasification, discontinuing the feedstock route permitted under NIP-2012.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q5. The New Investment Policy (NIP) for the urea sector, announced on 2 January 2013, was subsequently amended on which one of the following dates to facilitate fresh investment?

  • A. 1 April 2010, along with the roll-out of the Nutrient Based Subsidy scheme
  • B. 7 October 2014, to facilitate additional fresh investment in the urea sector
  • C. 25 May 2015, along with the notification of the New Urea Policy for existing units
  • D. 1 March 2018, along with the revision of the Maximum Retail Price of urea

Q6. In the context of the urea units commissioned under the New Investment Policy-2012, Hindustan Urvarak & Rasayan Limited (HURL) is best described as which one of the following?

  • A. A joint venture company of public sector undertakings that set up the urea units at Gorakhpur, Sindri and Barauni
  • B. A joint venture company of public sector undertakings that set up the urea unit at Ramagundam in Telangana
  • C. A private company that set up the greenfield urea unit at Panagarh in West Bengal
  • D. A public sector company executing the coal-gasification-based greenfield urea project at Talcher in Odisha

Q7. Consider the following statements regarding India's urea production and imports: 1. Import of urea for agricultural purposes, to bridge the gap between indigenous production and assessed demand, is undertaken by the Department of Agriculture and Farmers Welfare. 2. India's indigenous urea capacity rose from 207.54 LMTPA in 2014-15 to 283.74 LMTPA in 2023-24. 3. Urea production in the country touched a record 314.07 LMT in 2023-24 and stood at 306.67 LMT in 2024-25. Which of the statements given above is/are correct?

  1. Import of urea for agricultural purposes, to bridge the gap between indigenous production and assessed demand, is undertaken by the Department of Agriculture and Farmers Welfare.
  2. India's indigenous urea capacity rose from 207.54 LMTPA in 2014-15 to 283.74 LMTPA in 2023-24.
  3. Urea production in the country touched a record 314.07 LMT in 2023-24 and stood at 306.67 LMT in 2024-25.
  • A. 1 and 2 only
  • B. 1 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q8. The quantity of urea produced in India during the year 2024-25 was closest to which one of the following?

  • A. 225 lakh metric tonnes
  • B. 283.74 lakh metric tonnes
  • C. 306.67 lakh metric tonnes
  • D. 314.07 lakh metric tonnes

Q9. With reference to the regulatory framework governing fertilizers in India, consider the following: 1. Fertilizer has been declared an essential commodity under the Essential Commodities Act, 1955. 2. The Fertilizer (Control) Order, 1985 has been notified under the Essential Commodities Act, 1955. 3. Only neem-coated urea is permitted to be produced and distributed for agricultural use in the country. 4. Powers of search, seizure and punitive action for violations of the Fertilizer (Control) Order, 1985 vest solely in the Union Government, State Governments having no such role. Which of the above is/are correctly identified?

  1. Fertilizer has been declared an essential commodity under the Essential Commodities Act, 1955.
  2. The Fertilizer (Control) Order, 1985 has been notified under the Essential Commodities Act, 1955.
  3. Only neem-coated urea is permitted to be produced and distributed for agricultural use in the country.
  4. Powers of search, seizure and punitive action for violations of the Fertilizer (Control) Order, 1985 vest solely in the Union Government, State Governments having no such role.
  • A. 1 and 3
  • B. 2 and 4
  • C. 1, 2 and 3
  • D. 3 and 4 only

Q10. Clause 19 of the Fertilizer (Control) Order, 1985 relates to which one of the following?

  • A. Prohibition of the manufacture and sale of any fertilizer that does not conform to the prescribed standards of quality
  • B. Empowerment of the Union Government to statutorily notify the Maximum Retail Price of every fertilizer sold in the country
  • C. Mandatory registration of every fertilizer manufacturer and dealer exclusively with the Department of Fertilizers
  • D. Determination of the nutrient-wise rates of subsidy payable on all fertilizers on an annual or bi-annual basis

Q11. With reference to the urea supply situation in India during the Kharif season of 2025, consider the following: 1. Availability of urea for the season exceeded the assessed seasonal requirement. 2. Domestic urea production during October 2025 was lower than in October 2024. 3. Imports of agriculture-grade urea during April-October 2025 were more than double those in the corresponding period of 2024. 4. Urea consumption was higher than in the previous Kharif season, attributed mainly to a good monsoon permitting a larger sown area. Which of the above is/are correctly identified?

  1. Availability of urea for the season exceeded the assessed seasonal requirement.
  2. Domestic urea production during October 2025 was lower than in October 2024.
  3. Imports of agriculture-grade urea during April-October 2025 were more than double those in the corresponding period of 2024.
  4. Urea consumption was higher than in the previous Kharif season, attributed mainly to a good monsoon permitting a larger sown area.
  • A. 1, 2 and 3
  • B. 1, 3 and 4
  • C. 2 and 4 only
  • D. 2, 3 and 4

Q12. The brownfield ammonia-urea complex of 12.7 lakh metric tonnes capacity under execution at Namrup in Assam is being set up by which one of the following?

  • A. Brahmaputra Valley Fertilizer Corporation Limited
  • B. Hindustan Urvarak & Rasayan Limited
  • C. Ramagundam Fertilizers and Chemicals Limited
  • D. Fertilizer Corporation of India Limited