India, Feb. 6 — Union Budget 2026-27 signals a significant shift in India’s climate and industrial strategy by placing Carbon Capture, Utilisation and Storage (CCUS) at the core of long-term decarbonisation efforts. Moving beyond a sole emphasis on renewable expansion and net zero pledges, the government has acknowledged the need to curb emissions from carbon-intensive industries without compromising growth.
The Budget earmarks ₹20,000 crore over five years to scale CCUS technologies, indicating that the approach is being treated as a structural solution rather than a pilot initiative. The funding targets sectors such as steel, cement, power, refining, fertilisers, and chemicals industries that underpin manufacturing yet remain difficult to decarbonise through electrification or renewable substitution alone.
Reinforcing this direction, the government introduced the country’s first dedicated CCUS budget line with an initial ₹500 crore allocation under the Ministry of Power. The move builds on the CCUS Roadmap released in December 2025, which proposes a phased trajectory from research and pilot projects to commercial deployment. Estimated spending of around ₹4,500 crore over the next two years reflects an emphasis on reducing early stage risk and preparing the ground for wider adoption.
The multi-year funding strategy is designed to support demonstration facilities, encourage infrastructure planning, and provide policy certainty for investors. It is also expected to complement the development of India’s domestic carbon market by creating pathways to manage residual emissions that cannot be eliminated through existing clean energy solutions.
The broader global environment adds urgency to the initiative. As carbon standards tighten and measures such as the European Union’s carbon border adjustment mechanism reshape trade dynamics, emissions performance is increasingly linked to export competitiveness. For India’s manufacturing sector, adopting CCUS could help prevent future carbon related trade barriers while sustaining employment and industrial output.
Insights from the Economic Survey 2025-26 further contextualise the policy shift, noting that India finances the vast majority of its mitigation and adaptation efforts domestically. This constraint has driven the search for solutions that align climate goals with economic resilience an area where CCUS is seen as complementing energy efficiency and renewable power by addressing unavoidable industrial emissions.
Financial architecture will play a critical role in execution. While sovereign and prospective municipal green bonds are expanding access to capital, emerging technologies demand risk sharing frameworks, patient financing, and consistent regulatory signals.
Equally important is the creation of shared infrastructure. Experts highlight that cluster-based hubs, common transport systems, and secure storage networks are essential for cost effective deployment. India’s geological storage capacity is considered promising, but governance structures, liability norms, and monitoring mechanisms will need to mature alongside project rollout.
Taken together, the Budget underscores a pragmatic model of climate action modernising industry rather than shrinking it. Alongside investments in grid resilience, clean energy, efficiency measures, and strategic minerals, CCUS is being positioned as a foundational pillar in India’s transition toward a low carbon economy.
Views expressed are personal and attributed to Manoj Kumar Bansal, Partner, Energy and Climate Practice, Grant Thornton Bharat LLP, and Pradeep Singhvi, Executive Director, Energy and Climate Practice, Grant Thornton Bharat LLP.