Sanchita Chatterjee, PIB, BS News Agency: The Union Budget 2026–27 has announced a new scheme to support states in setting up three chemical parks through a competitive process.
These parks will be developed on a cluster-based, plug-and-play model, with shared infrastructure management and environmental clearances.
A budgetary allocation of ₹600 crore has been made in the Budget Estimates (BE) for FY 2026–27 for the establishment of these chemical parks.
This initiative aims to boost domestic chemical production and reduce reliance on imports.
An allocation of ₹20,000 crore has also been announced for the development and deployment of Carbon Capture, Utilization and Storage (CCUS) technologies.
Introduction
India is currently the world's sixth-largest producer of chemicals. There is significant potential to further strengthen India's position globally, particularly in high-value specialty chemicals. Existing industrial clusters in states like Gujarat, Odisha, Andhra Pradesh, and Tamil Nadu have played a crucial role in attracting investment and generating employment. However, long-term competitiveness requires coordinated infrastructure development, simplification of regulatory processes, and streamlined environmental clearances. In this context, the chemical parks proposed in the Union Budget 2026–27 emerge as a forward-looking, infrastructure-driven initiative.
Boosting Chemical Production
For the first time, the Union Budget 2026–27 has provided budgetary support for chemical parks. States will be supported in setting up three chemical parks through a competitive selection process, with an allocation of ₹600 crore. The objective is to enhance domestic production capacity, strengthen supply chain integration, and reduce import dependence.
Chemical Industry: At a Glance
India's chemical industry provides crucial inputs to sectors such as agriculture, pharmaceuticals, textiles, automobiles, and construction, contributing approximately 7 percent to the country's GDP. As the sixth-largest producer globally and the third-largest in Asia, India produces over 80,000 chemical products. According to the Economic Survey 2025–26, this sector contributed 8.1 percent to GVA (Gross Value Added), and production has consistently increased over the past decade.
What is a Chemical Park?
A chemical park is a planned industrial cluster specifically designed for chemical and petrochemical production. Multiple manufacturing units operate collaboratively within the park, leading to increased efficiency, enhanced safety, and reduced environmental pollution.
Strategic Objectives of Chemical Parks
The initiative aims to increase the country's chemical production capacity, promote cluster-based industrial development, reduce environmental pollution, empower MSMEs (Micro, Small, and Medium Enterprises), attract investment, create employment, and foster sustainable production systems.
The Need for Chemical Parks in the Current Context
Cluster-based models like Plastic Parks, Bulk Drug Parks, and PCPIRs (Petroleum, Chemicals and Petrochemicals Investment Regions) have already demonstrated the benefits of shared infrastructure and integrated planning. Chemical parks will build upon this experience, extending the plug-and-play model to the broader chemical value chain, thereby reducing project implementation time and costs and enhancing international competitiveness.
Establishment of Plastic Parks
The Plastic Parks project plays a crucial role in plastic waste management, recycling, and the development of the plastic processing industry. Several plastic parks have been established in various states with central government grants, contributing to increased investment, production, and employment.
Bulk Drug Parks
Launched in 2020, this project aims to achieve self-reliance in bulk drug production. Through shared infrastructure and testing facilities, it has enabled reduced production costs, minimized environmental pollution, and enhanced production capacity during emergencies.
Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR)
PCPIRs are integrated industrial zones where manufacturing units, utilities, logistics, and environmental protection systems are developed together. Existing PCPIRs in Andhra Pradesh, Gujarat, and Odisha have contributed to increased exports and regional development. CCUS and Chemical Parks
The allocation of ₹20,000 crore for Carbon Capture, Utilization, and Storage (CCUS) technology reflects India's commitment to achieving low-carbon emission targets in the industrial sector. Chemical parks will facilitate the application of CCUS and other environmentally friendly technologies at a lower cost and on a larger scale through shared infrastructure.
Conclusion
The establishment of three chemical parks is a significant achievement for India's chemical manufacturing sector. This infrastructure-driven initiative will attract investment, reduce imports, strengthen MSMEs, create employment, and promote environmentally friendly production. Combined with CCUS support, this project will further strengthen India's supply chain and transform the country into an internationally competitive and reliable chemical manufacturing hub.