India’s Chemical Industry Welcomes Union Budget 2026–27
India’s chemical industry has responded positively to the Union Budget 2026–27. The budget focuses on boosting local manufacturing, building better infrastructure, and promoting sustainable growth. Industry leaders believe these measures will help India compete globally, reduce dependence on imports, and strengthen domestic supply chains.
New Chemical Parks
A major part of the budget is the plan to build three new Chemical Parks in different states. These parks will have complete industrial setups to support chemical production. The government has set aside Rs. 600 crore for this scheme in 2026–27. Experts say these parks will help increase local production, lower costs, and create opportunities for small and medium businesses.
Decarbonisation and Climate Goals
The chemical sector will play a key role in reducing carbon emissions using Carbon Capture, Utilisation, and Storage (CCUS) technologies. Over the next five years, Rs. 20,000 crore is proposed to support CCUS, especially for industries with steady emissions like chemicals, cement, steel, and refineries. This will help industries reduce pollution while staying competitive as global climate rules get stricter.
Customs Duty Changes
The budget also updates customs duties. The Basic Customs Duty (BCD) on Potassium Hydroxide will rise from 0% to 7.5%, starting February 2, 2026, to protect Indian manufacturers. Some duty exceptions, like naphtha for fertilizers, alpha pinene, and other catalysts, will end on April 1, 2026.
Infrastructure and Logistics
The budget sets a capital expenditure target of Rs. 12.2 lakh crore for infrastructure. This includes expanding national waterways, high-speed railways, ports, and ship-repair facilities. Better transport will benefit chemical companies that rely on moving raw materials and finished goods efficiently.
Support for Technology and Clean Energy
Industry leaders welcome budget initiatives like ISM 2.0, semiconductors, electronics, data centers, and an AI-led platform, as these will strengthen India’s manufacturing ecosystem and increase demand for chemicals. To learn more, you can check our Data Analysis course.
The budget also provides BCD exemptions for machinery used in making lithium-ion batteries and battery energy storage systems (BESS). Support for nuclear power projects continues. These steps are expected to make clean energy more cost-effective and help integrate renewable energy with storage for a continuous power supply.
Industry Feedback
Overall, the response from experts is positive. However, some suggest more financial support for green technology projects, quicker clarity on new labor laws, and stronger export support. Most agree that the budget has solid strategies for growth and sustainability.
Union Budget 2026–27 aims to strengthen India’s chemical industry. By improving infrastructure, supporting local manufacturing, reforming customs duties, and promoting green growth, it prepares India to compete globally. This budget also aligns with India’s larger goal of building a sustainable and self-reliant economy.
