The latest Union Budget of India places carbon capture at the center of its industrial climate strategy, with Rs 20,000 crore (about $2.4 billion) earmarked over five years to speed up Carbon Capture, Utilisation and Storage across heavy industry. The funding is designed to move projects beyond demonstration stage and into wide commercial use.
The plan focuses on emission-heavy sectors such as steel, cement, power, refining, and chemicals. By directing public finance toward capture and storage, the government is signaling that deep emission cuts in these sectors will rely in part on managing carbon rather than only avoiding it.
The budget move also connects climate policy with economic strategy and policymakers have decided that supporting CCUS strikes the right balance between emission reductions and maintaining industrial output in a dynamic international environment where Europe’s CBAM has become the first (but likely not the last) carbon pricing mechanism.
The carbon capture path of India
India’s work on carbon capture did not start with this budget. Since 2018, the country has taken part in international research partnerships to explore new approaches for capturing, separating, storing, and using carbon dioxide. These collaborations have aimed to build technical knowledge and lower future costs.
Policy thinking has also evolved. National roadmaps and strategy papers like the 2022 “CCUS Policy Framework and its Deployment Mechanism in India” have increasingly framed CCUS as a tool that can complement renewable energy, especially where fossil fuels still provide reliable power or industrial heat.
capture cost curve for demo scale carbon capture
projects Indian industries. Rs 1,000 = $10.91. Image: CCUS Policy Framework and its Deployment Mechanism in India (2022)
A notable step came in 2025 with the launch of a cluster of carbon capture and utilization testbeds in the cement sector. Led by the Department of Science and Technology, the initiative turned one of the most carbon intensive industries into a testing ground for practical solutions. These early projects helped create local expertise and real world data on performance.
The potential for credits
Carbon markets could become an additional driver for CCUS in India. The Bureau of Energy Efficiency has already brought carbon capture within the scope of the Carbon Credit Trading Scheme. This opens the door for future recognition of emission reductions from capture projects once detailed methodologies are finalized.
At present, India’s carbon market mainly rewards emission intensity improvements and various offset activities. A dedicated, fully operational system that directly credits captured and stored carbon is still in development. If robust rules for monitoring and verification are introduced, CCUS projects could eventually earn tradable credits, improving project economics and attracting private investment.
Together, the $2.4 billion budget commitment and potential credit revenues could shape a new business case for carbon capture in India’s hardest to abate sectors as the country moves toward its 2070 net zero goal.
Read more: India’s Govt Outlines Approved Sectors For Carbon Capture And Trading System
