Budget 2026: Govt allocates ₹600 crore for three dedicated chemical parks

For the first time, the Union Budget provides a dedicated allocation for chemical parks, with ₹600 crore earmarked in the Budget Estimates for 2026-27

Presenting the Union Budget 2026-27 in Parliament on Sunday, Finance Minister Nirmala Sitharaman said the government would launch a scheme to support states in setting up three dedicated chemical parks.

 

“To enhance domestic chemical production and reduce import dependency, we will launch a scheme to support states in establishing three dedicated chemical parks through a challenge route, on a cluster-based plug-and-play model,” Sitharaman said.

 

Budget documents outlining scheme-wise allocations showed that the proposed chemical parks have been allotted ₹600 crore in the Budget Estimates for 2026–27, marking the first instance of direct budgetary support for such infrastructure.

 

The announcement comes amid long-standing efforts to create dedicated facilities to meet rising domestic demand in the chemicals sector and strengthen manufacturing capacity.

Earlier policy initiatives

In 2023, Chemicals and Fertilisers Minister Mansukh Mandaviya had said the Centre was working towards establishing chemical parks to support domestic demand and promote innovation.

 

In August 2025, the Ministry of Chemicals and Fertilisers outlined existing policy measures to promote chemical industrial clusters in a written reply to the Rajya Sabha.

 

Minister of State for Chemicals and Fertilisers Anupriya Patel said the government had introduced two major initiatives to develop chemical industrial parks.

 

The first was the Petroleum, Chemical and Petrochemical Investment Regions (PCPIR) policy, notified in 2007 to attract investment and generate employment. Under the policy, cluster-based regions with common infrastructure and support services were planned to create a competitive business environment. Three PCPIRs were notified — Visakhapatnam in Andhra Pradesh, Dahej in Gujarat, and Paradip in Odisha.

 

The second initiative was the Scheme for Setting up of Plastic Parks, launched in 2010–11 to promote need-based plastic parks with shared infrastructure and common facilities. Under the scheme, 10 plastic parks were approved across different states and are at various stages of implementation.

Sector growth and infrastructure impact

The PCPIR policy contributed to the expansion of the chemicals and petrochemicals sector by encouraging integrated industrial development and shared infrastructure. Official data show that 2,246 industrial units were established under the policy, generating employment for 3,71,263 people and attracting investments of ₹3,40,538 crore.

 

Shared infrastructure facilities, including utilities, waste management systems and logistics support, helped reduce operational costs for individual units and improved compliance with environmental and safety regulations.

 

All three PCPIRs were aligned with India’s manufacturing corridors to strengthen connectivity. The Dahej PCPIR was located near the Delhi–Mumbai Industrial Corridor, while the Visakhapatnam and Paradeep PCPIRs were aligned with the East Coast Economic Corridor.