Union Budget 2026-27: India Boosts Chemical Sector with New Parks and Carbon Capture Initiatives

Published By DPRJ Universal | Published on Sunday, 1 February 2026

Finance Minister Nirmala Sitharaman announced a new scheme in the Union Budget 2026-27 to establish three dedicated chemical parks with Rs. 600 crore, aiming to reduce import dependency and strengthen domestic manufacturing. This marks the first direct budgetary support for such infrastructure. Additionally, Rs. 20,000 crore is allocated over five years for Carbon Capture Utilization and Storage (CCUS) technologies, benefiting the chemical sector, among others. The budget also includes a scheme to revive 200 legacy industrial clusters, further aiding the Chemicals and Petrochemicals sector.

The Union Budget 2026-27, presented by Finance Minister Nirmala Sitharaman, introduced significant initiatives aimed at bolstering India's chemical sector. A key announcement is a new scheme to support states in establishing three dedicated chemical parks. These parks will be developed via a challenge-based, cluster-driven, plug-and-play model, with an initial allocation of Rs. 600 crore in the Budget Estimates for FY27. This funding signifies the first time direct budgetary support has been provided for dedicated chemical park infrastructure. The primary objectives are to enhance domestic chemical production, reduce import dependence, strengthen India's manufacturing base to meet rising demand, and contribute to the 'Viksit Bharat' vision of making India a global manufacturing hub.Furthermore, the budget emphasizes green initiatives by proposing the rollout of Carbon Capture Utilization and Storage (CCUS) technologies. An outlay of Rs. 20,000 crore over the next five years is earmarked to facilitate these technologies across five industrial sectors, including Chemicals, Power, Steel, Cement, and Refineries. The CCUS program aims to reduce carbon emissions by either storing or reusing captured carbon dioxide, preventing its release into the atmosphere. In another move to improve industrial efficiency and competitiveness, the budget also announced a scheme to revive 200 legacy industrial clusters through infrastructure and technology upgradation, a measure expected to significantly benefit the Chemicals and Petrochemicals sector. These combined efforts underscore the government's commitment to accelerating economic growth, preserving jobs, and fostering a robust and sustainable industrial landscape.