India Greenlights ₹19,700 Crore Carbon Capture Push to Accelerate Industrial Decarbonization

India has taken a significant step toward industrial decarbonization by approving a ₹19,700 crore fiscal framework to deploy advanced carbon capture, utilization, and storage (CCUS) technologies across key sectors of the economy. The initiative, first announced in the Union Budget 2026–27, aims to bridge the gap between pilot-scale projects and large-scale commercial deployment of carbon capture solutions.

Designed as a catalyst for private investment, the government’s funding is expected to unlock an additional ₹17,800 crore from industry, creating a total CCUS investment pipeline of approximately ₹37,500 crore over the next five years. A dedicated ₹2,500 crore research and innovation fund has also been established to support the development of low-cost, indigenous carbon capture technologies, including advanced chemical absorption and mineral carbonation processes.

The first phase of the program targets the capture of up to 7 million tonnes of carbon dioxide annually, focusing on sectors where emissions are difficult to eliminate through electrification alone. These include coal-based power generation, steel manufacturing, cement production, and refining and chemical operations.

India’s geological advantages are expected to play a central role in the initiative. Studies indicate that the country possesses more than 350 gigatons of potential underground carbon storage capacity, particularly in saline aquifers across Gujarat and Rajasthan and basalt formations in Maharashtra and Madhya Pradesh. These basalt formations are considered especially valuable because they can naturally convert stored carbon dioxide into stable mineral compounds over time.

Beyond emissions reduction, the framework also supports the development of a circular carbon economy. By combining captured CO₂ with green hydrogen, India could expand domestic production of sustainable fuels, methanol, and other low-carbon products while supporting its long-term net-zero emissions target for 2070 and strengthening energy security.

₹19,700 crore for CCS moves India's industrial decarbonization from concept into commercial deployment, and it affects capex sequencing for cement, steel, refining and fertiliser producers who've been stuck on process-emissions abatement. Our climate-action and responsible-investment teams help clients evaluate what CCS opportunities mean for transition plans and disclosure.