State-owned Rashtriya Chemicals and Fertilizers Ltd (RCF) and Gail have signed a memorandum of understanding to establish a new urea plant in Maharashtra.
The facility, with a capacity of 1.27 million tonnes per annum (MTPA), will be developed through a Special Purpose Vehicle (SPV) jointly owned by the two companies.
The move comes as India's domestic urea production has contracted.
Output fell to 293.26 lakh tonnes in the 2025-26 fiscal year, a decline from 306.67 lakh tonnes in the preceding year.
The new plant is expected to help offset this shortfall and reduce reliance on imports.
RCF has recently taken steps to raise capital for expansion.