Page 22 - Policy Economic Report - Jan 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

(CCUS) technologies, alongside targeted basic customs duty exemptions aimed at strengthening clean
energy and critical mineral supply chains.

o ?20,000 crore proposed to be allocated for Carbon Capture Utilization, and Storage Technologies
over the course of the next 5 (five) years. The budget recognizes the role of carbon capture
technologies in hard-to-abate sectors, supporting industrial decarbonization, and net-zero
pathways.

o Extension of the basic customs duty (“BCD”) exemption on capital goods used for manufacturing
lithium-ion batteries to those used for manufacturing Lithium-Ion Cells for battery energy storage
systems. This reduces capital costs for battery energy storage systems manufacturing, improving
project economics and domestic capacity creation.

o Extension of BCD exemption on sodium antimonate for solar glass manufacturing. This supports
domestic solar module value chains by lowering raw material costs and improving the global
competitiveness of Indian manufacturers.

o Extension of BCD exemption on import of monazite. This ensures the availability of critical
minerals with applications across the renewable energy and nuclear sectors.

o Extension of BCD exemption for nuclear power project goods until 2035. This supports scaling up
of nuclear capacity in line with the Sustainable Harnessing and Advancement of Nuclear Energy
for Transforming India (SHANTI) Act, 2025.

o Exclusion of the full value of biogas from excise duty computation on biogas-blended CNG. It
improves pricing and commercial attractiveness of biogas blending, accelerating adoption of
cleaner transport fuels.

o Restructuring of Power Finance Corporation and Rural Electrification Corporation. This aims to
improve operational efficiency, balance-sheet strength, and lending capacity of key energy sector
financiers.

o Development of dedicated rare-earth corridors in select mineral-rich states. Facilitates systematic
exploration, extraction, and logistics of critical minerals essential for clean energy, electronics,
and advanced manufacturing, in the states of Odisha, Andhra Pradesh, Kerala, and Tamil Nadu.

o New BCD exemption on capital goods for processing critical minerals. Encourages domestic
processing and value addition in the critical minerals value-chain.

6. India–EU Partnership: India’s Growing Engagement with European Union
India–EU relations have entered a phase of renewed strategic momentum, with both sides intensifying
engagement ahead of the forthcoming India–EU Summit in New Delhi. India and the European Union are
seeking to advance long-pending Free Trade Agreement (FTA) negotiations and adopt a new Joint
Strategic Agenda to steer the partnership beyond the existing roadmap. This ongoing engagement
underscores a mutual commitment across trade, investment, clean and green energy, science and
technology, security and defence, digital initiatives, connectivity, space, and agriculture.

The EU remains India's largest trading partner for goods, with bilateral trade reaching approximately $136
billion in 2024-25. EU is also among India’s top overall trading partners in both goods and services.

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