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Ministry of Chemicals and Fertilizers | Department of Chemicals & Petrochemicals | NITI Aayog
The Government of India has proposed a new infrastructure-led scheme to establish three dedicated Chemical Parks, announced as a core component of the Union Budget 2026–27. This initiative, supported by an initial allocation of ₹600 crore, aims to assist States in setting up these parks through a challenge-based selection mechanism. The parks are designed as cluster-based, plug-and-play manufacturing ecosystems that provide ready-to-use industrial infrastructure, common environmental facilities, and coordinated governance to reduce project gestation timelines and capital costs.
Strategic Integration and Environmental Sustainability The Chemical Parks represent a significant shift toward integrated, supply-side policy architecture for the sector:
Value Chain Expansion: Unlike specialized clusters like Bulk Drug or Plastic Parks, these dedicated zones will encompass the wider chemical value chain, including bulk, specialty, and downstream segments.
Low-Carbon Innovation: The budget also allocates ₹20,000 crore over the next five years for Carbon Capture, Utilisation and Storage (CCUS) technologies. These integrated parks will serve as primary platforms for the cost-effective deployment of such clean technologies at scale.
Global Competitiveness: By leveraging shared utilities and logistics support, the initiative seeks to enhance India’s position as the world’s sixth-largest chemical producer and reduce long-term import dependence.
What is the “Challenge-Based Route” for selecting Chemical Parks in the 2026-27 Budget? The challenge-based route is a competitive selection process where States bid to host the new Chemical Parks by demonstrating their readiness in terms of land availability, logistical connectivity, and regulatory ease. This method ensures that the ₹600 crore allocation is directed toward regions with the highest potential for industrial synergy and successful project implementation, moving away from traditional entitlement-based funding to a performance-driven infrastructure model.
Policy Relevance
The establishment of Chemical Parks signals a transition from fragmented manufacturing to a cluster-led, sustainable ecosystem.
Institutionalizing Sustainable Growth: By integrating CCUS funding with dedicated park infrastructure, the government is making decarbonization a mandatory part of India’s industrial scaling strategy, preparing the chemical sector for global ‘green’ trade standards.
Streamlining Regulatory Compliance: Shared environmental facilities like Central Effluent Treatment Plants (CETPs) within the parks lower the compliance burden for individual units, particularly MSMEs, fostering a more inclusive and law-abiding manufacturing environment.
Strengthening Supply-Chain Resilience: Co-locating diverse units—from bulk chemicals to specialty segments—enables stronger forward and backward integration, reducing the logistical ‘friction’ and import reliance currently seen in high-value specialty chemical segments.
Relevant Question for Policy Stakeholders: How can the Ministry of Chemicals and Fertilizers ensure that the ‘Challenge-Based Route’ prioritizes States that have already established ‘Petroleum, Chemicals and Petrochemical Investment Regions’ (PCPIRs) to maximize existing logistical synergies?
Follow the full news here: Union Budget FY 2026-2027: Chemical Parks | PIB