The election of Donald Trump as the President of the United States seems to have not just shifted priorities in the US but also across the world, especially with areas like climate change and decarbonisation seeming to have taken a back seat.
The Union Budget 2025-26, announced in the Indian Parliament, seems to have given a miss to areas like decarbonisation and green transition, having no major breakthrough announcements for the same. Except for the boost given to nuclear energy and a few mentions of promoting green tech manufacturing under the National Manufacturing Mission, nothing substantial was announced for this area, especially considering the kind of green transition the country is looking to go through.
The budgets for the previous years have made announcements about retiring coal power plants and co-firing, Green Hydrogen Mission, Indian Carbon Markets, rebates on electric vehicles and many such initiatives. These announcements, though not consolidated, sent out a message that the government is taking steps towards decarbonisation of the economy.
But this year, the budget speech is devoid of the word ‘carbon’. This is not a good sign, especially when various entities from different sectors of the country are making strides to decarbonise and transition towards cleaner production and services to keep pace with the global green transition.
There are several areas in this ongoing transition journey that require focus and support in terms of policy as well as finance. Some of the areas that were expected to find focus and should be part of India’s budget allocations and planning are:
• Support for accelerating renewable energy generation: Although our renewable energy (RE) capacity seems to be increasing year on year, generation from RE has been low. There are barriers in accelerating the share of RE generation, these barriers need to be addressed with the help of appropriate policies, incentives and financial support.
• Support schemes for transitioning emission intensive micro, small and medium enterprises (MSME): The contribution of MSMEs to our economy is immense, but there are a number of emission-intensive MSMEs like brick kilns and metal industries that need to shift towards cleaner production and would require focused sectoral support to do so.
• More support for scaling alternate cleaner fuels: Although there has been funds allocated for cleaner fuels like green hydrogen, there is a need for research and development and finances to develop multiple options of cleaner fuels that are affordable in the coming times to make this transition a reality. Several alternate fuels like biochar, biofuels, refused derived fuels and others need support for scaling up.
• Support for carbon abatement technologies: There are several technologies that lead to carbon abatement technologies across various sectors. Most of these technologies are developed overseas and often their operationalisation in the Indian context becomes economically challenging. For instance, technologies like carbon capture, utilisation and storage (CCUS) are being looked at as a significant abatement technology for decarbonisation of hard-to-abate sectors across the world and developed economies have been providing various forms of incentives and infrastructure to industries for its uptake.
But India currently lacks any policy on CCUS and also the utilisation scenario seems to be economically unviable on the ground. Therefore, it becomes essential to have a policy around it, understand its viability in the Indian context and support or incentivise industry players to be able to take up this technology for decarbonisation (if found feasible). A number of Indian steel and cement companies already have it as one of their major strategies for reaching net zero.
• Building the ecosystem for waste circularity: It is important to note that waste circularity is an essential co-beneficial approach for decarbonisation and many other problems we face today. It is important to build formalised ecosystems for different waste streams that could play a huge role as alternate raw materials or fuels in decarbonisation and green transition.
The budget did mention revamping the ship breaking facilities of India, but numerous other waste streams still await the required ecosystem and support to be able to be used as a resource. With the new solid waste management rules’ increasing focus on circularity from industrial sectors, it becomes more prudent to enable financial support towards waste handling, management and utilisation.
• Pushing domestic demand for low carbon products: Along with pushing for low-carbon manufacturing or services it becomes essential to generate substantial demand for green products and services. The public sector is usually the first mover in such initiatives but for any public entity to move in this direction would require mandates and financial support and incentive. Recently, India became the first country to define green steel, but to make initiatives like these a success, it is essential to have substantial demand for these green products.
The government has introduced several policy measures in recent years to facilitate decarbonisation across different sectors. Many of these policies and initiatives could be crucial for reducing emissions. However, these efforts remain fragmented across different ministries and the absence of a dedicated mission body to integrate and steer India’s green transition remains a critical gap.
Along with this, clear ambitious sectoral decarbonisation pathways need to be laid out for all sectors contributing to India’s emissions. While some sectors — such as energy, steel and mobility — have started making some progress, many high-emitting sectors still lack clear, ambitious decarbonisation roadmaps and an understanding of the financial and technological resources required for the transition.
Industrial decarbonisation, in particular, demands stronger government engagement. The sector needs not only technological innovation but also targeted policy support both for the supply as well as demand side — such as financial incentives, tax benefits on greener alternatives (like lower GST on low-carbon products) and much more.
Yet, many such measures were overlooked in this budget. Additionally, the government’s ambition to achieve 100 gigawatts of nuclear power by 2047 raises an interesting question about its role in industrial energy supply and whether it is being eyed as a key enabler of deep decarbonisation in the industrial sector? If yes, how feasible will that be?
To truly decarbonise India’s economy, a coherent and sector-specific approach is essential — one that combines strong policy signals, financial accessibility and industrial innovation. While India has begun to take crucial steps, a comprehensive strategy that aligns all initiatives and sectors toward a low-carbon future is the need of the hour.
The success of this transition will not only determine India’s ability to meet its climate goals but also define its global competitiveness in a decarbonising world. Hoping that we find the agendas discussed above in future budgets and planning of the government as every passing year is crucial and we cannot afford missed opportunities anymore.