Finance Minister NirmalSitharaman’s Union Budget 2026-27 bolsters green supply chains through duty free inputs for India’s INR 20,000 crore Carbon Capture Utilisation and Storage scheme and exemptions for nuclear power, battery storage, critical minerals and solar glass manufacturing.
The 2026-27 budget, with a GDP growth target of around 7%, uses a mix of public spending, tax measures, and planned institutional reforms that can lower long-term economic risks. And while it doesn’t present a separate climate chapter, the budget’s provisions embed sustainability into core growth strategy that seeks to strengthen clean supply chains.
Energy transition is seen as a priority with allocations across the Ministry of New and Renewable Energy (INR 32,915 crore), Ministry of Power (INR 29,997 crore) and the Department of Atomic Energy (INR 24,124 crore) working together to reduce risks from intermittency and import dependence. Customs duty exemptions for lithium-ion cells are extended to battery energy storage
systems, while key inputs for solar glass manufacturing are exempted. Nuclear power project imports receive duty exemption till 2035, expanded to all plant capacities. On cleaner fuels, the entire value of biogas is excluded while calculating central excise duty on biogas-blended CNG, improving the commercial viability of waste-to-energy pathways and city gas distribution.
In parallel, INR 5000 crore per City Economic Region is proposed over five years for Tier-2 and Tier-3 cities, while larger cities issuing municipal bonds over INR 1000 crore will receive INR 100 crore incentive. The AMRUT incentive for bond issuances up to INR 200 crore in small and medium cities will continue.
Sustainable livelihoods and food systems are strengthened through integrated development of 500 reservoirs and AmritSarovars to support fisheries. High value crops such as coconut, cocoa, cashew and sandalwood are prioritised to improve farm incomes and reduce import dependence, linking sustainability with rural growth.
While Carbon Capture, Utilisation and Storage has received INR 20,000 crore over five
years, targeting hard-to-abate sectors such as power, steel, cement, refineries and chemicals, the budget falls short of addressing renewable targets or demand pull measures like EV infrastructure or rooftop solar. It also remains silent on adaptation measures.
The budget advances sustainable mobility through a clear shift in transport planning. It
proposes development of 20 new national waterways over five years, starting with Odisha, supported by training institutes for inland waterways and ship repair facilities in Varanasi and Patna. The target is to raise the share of coastal shipping and inland waterways from 6 percent to 12 percent by 2047. Manufacturing of seaplanes will be indigenised. For passenger transport, seven high-speed rail corridors are identified as environmentally sustainable growth connectors, linking Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, and Delhi-Varanasi-Siliguri.
Nature protection is linked with livelihoods, tourism and urban development. Ecologically sustainable mountain, turtle and bird-watching trails will be developed across the Himalayas, Eastern, and Western Ghats, and coastal regions. Overall, while the Budget 2026-27 falls short on expansion of renewable energy andadaptation finance, leaving climate vulnerability gaps unaddressed, it delivers credibleindustrial climate tools for sustainable growth.
(The writer is a communication consultant)