FM bets big on India's Green Future: Rs 20,000 crore boost for carbon capture revolution
New Delhi, Feb 1 : In a major step toward India's net-zero ambitions, Finance Minister Nirmala Sitharaman announced a substantial allocation of Rs 20,000 crore over the next five years for Carbon Capture, Utilisation and Storage (CCUS) technologies in the Union Budget 2026-27 presented on February 1.
This funding aims to accelerate the deployment of CCUS in hard-to-abate industrial sectors, positioning the country to meet its climate commitments while maintaining economic growth.
CCUS involves capturing carbon dioxide emissions from industrial sources, utilising the captured CO2 in products like chemicals or enhanced oil recovery, or storing it permanently underground to prevent atmospheric release. The technology is crucial for decarbonising sectors where emissions are difficult to eliminate through renewables alone, such as power generation, steel production, cement manufacturing, refineries, and chemicals.
These industries form the backbone of India's heavy manufacturing and contribute significantly to its greenhouse gas output.
The finance minister emphasised that the outlay would support scaling up CCUS technologies and achieving higher readiness levels for end-use applications across these five key sectors.
The initiative aligns with the government's CCUS roadmap launched in 2025, which outlines pathways for technology maturation, pilot projects, and eventual commercial rollout.
By investing in research, demonstration plants, infrastructure for CO2 transport and storage, and incentives for adoption, the proposal seeks to build domestic capabilities and reduce reliance on imported solutions.
This move comes amid global demand, including the European Union's Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on high-carbon imports like steel and chemicals.
The allocation is expected to help Indian exporters, particularly in steel and chemicals, maintain competitiveness in international markets by lowering their carbon footprint.
The Rs 20,000 crore commitment is a pragmatic shift in India's decarbonisation strategy, focusing on practical solutions for emission-intensive industries rather than solely relying on renewable expansion.
The funding could spur private sector participation through public-private partnerships, technology indigenisation, and job creation in green engineering and storage operations.
Industry stakeholders see it as a boost for their sustainability efforts and ESG compliance.
The proposal integrates with broader green infrastructure pushes in the budget, such as high-speed rail corridors and inland waterways, signalling a holistic approach to sustainable development.
As implementation details unfold, the success of this CCUS push will depend on effective policy execution, regulatory frameworks for carbon markets, and international collaborations for technology transfer.
With this bold announcement, India aims to transform a climate challenge into an opportunity for innovation and industrial resilience on the path to Viksit Bharat.