India will allocate 200bn rupees ($2.2bn) over the next five years for carbon capture, utilisation and storage (CCUS), the government said in its 2026-27 federal budget presented on 1 February.
The funding would support the scaling up of CCUS technologies to reduce the carbon intensity of industrial production, particularly in hard-to-abate sectors, finance minister Nirmala Sitharaman said in her budget speech.
The budget links the proposed outlay to a national CCUS research and development roadmap launched in December 2025, which aims to raise the technology readiness level of CCUS applications from laboratory and pilot stages to deployment in industrial settings.
Geological assessments cited in the national CCUS roadmap estimate over 390mn t of CO2 storage potential, including 291mn t in deep saline aquifers, 97mn-316mn t in Deccan and Rajmahal basalt formations, and around 1.2mn t of viable storage through enhanced oil recovery (EOR) in mature oilfields.
Western India's emerging Gujarat cluster — centred on state-owned refiner IOC's Koyali refinery and state-owned ONGC's Gandhar oilfield — is the country's most advanced integrated project and is designed to capture and transport 1,500 t/d of CO2 for injection into its facility. ONGC launched a full-scale CCS pilot at Gandhar last month, with plans to inject 100 t/d of captured CO2 into depleted wells using supplies from the Dahej industrial cluster and its Hazira plant.
In the northeast, state-controlled upstream firm Oil India (OIL) is piloting CO2 flooding in the Barail and Tipam formations, positioning Assam as a second early mover hub after Gujarat. CO2 flooding is a process in which CO2 is injected into reservoirs to increase oil recovery while storing part of the injected CO2 underground. Other potential CCUS corridors identified include the Krishna-Godavari basin, Cambay, Cauvery, Mumbai Offshore and the Assam-Arakan Fold Belt.
Power generation, steel, cement, refineries and chemicals have been identified as priority sectors for CCUS application, according to the minister's budget speech, reflecting the government's focus on reducing the carbon intensity of energy-intensive industries.
India currently has no large-scale operational CCUS facilities. The budget documents do not specify annual allocations, sector-wise funding splits, project timelines or implementation mechanisms for the proposed outlay.
The CCUS funding marks the first time India has attached a dedicated multi-year fiscal commitment to the technology in the federal budget.
The budget also included measures aimed at lowering the tax burden on low-carbon fuels. The government will exclude the entire value of biogas while calculating a central excise duty on biogas-blended compressed natural gas (CNG), Sitharaman said, effectively applying the duty only to the fossil CNG component. The move is intended to encourage greater blending of biogas and support the use of renewable gas alongside fossil fuels.
