Union Budget 2025 reporting and Outcomes

Published on March 7, 2025 by Manish Chandna and Prabaldeep Paul

The Union Budget 2025-26, unveiled by Finance Minister Nirmala Sitharaman, is widely regarded as a forward-thinking budget, as it emphasises four important growth engines – agriculture, MSMEs, investment and exports. The budget, which aims to implement “transformative” reforms across six key areas – taxation, the financial sector, the power sector, urban development, mining and regulatory reform – would drive significant change and improvement in these critical sectors, fostering overall economic growth and development

The Union Budget 2025-26 once again underscores the country’s commitment to achieving energy security and self-reliance with significant investments in renewable energy, EV infrastructure, oil and gas and key policy reforms for nuclear energy and green hydrogen.

Oil and gas

The Budget emphasises future readiness with strategic investments in infrastructure. Key allocations for pipeline infrastructure, CBG blending, cavern construction, ethanol blending and crude oil reserves highlight a focus on diversifying energy sources and enhancing energy security.

Budget Announcement

The budget for strategic oil reserves increased from the Revised Estimate (RE) of INR1.30bn (c.USD15m) for FY25 to INR58.76bn (c.USD678m), with a fresh allotment of INR55.97bn (c.USD646m) for payment to the ISPRL for crude oil reserves.

The Budget Estimate (BE) of INR1bn (c.USD12m) for construction of caverns under Phase II with aggregate capacity of 12.50MMT.

The BE for the pipeline infrastructure scheme for injection of CBG in the CGD network increased by 733% to INR2.5bn (c.USD29m) from INR0.3bn (USD3.46m) in FY25.

Outcomes:

Ensuring energy security, with plans to increase crude oil storage capacity by constructing additional caverns and boosting imports to support peak demand, mitigating supply risks arising from geopolitical tensions or global supplychain disruptions.

A programme to promote biofuel adoption and blending ethanol and CBG aims to enhance selfsufficiency and contribute to the country’s circular economy.

Chemicals and fertilisers

The announcement of a new urea plant underscores the government’s aim to improve fertiliser availability and reduce reliance on imports, charting a strategic course towards fostering a self-sufficient India

Budget Announcement

The Department of Fertilisers received the major share (96.6% of the budget), followed by the Department of Pharmaceuticals (3.3%) and the Department of Chemicals and Petrochemicals (0.1%).

A new urea plant with an annual capacity of 1.27m metric tonnes is set to be established in Assam.

In compliance with the 2023-24 budget announcement, a new scheme for promoting organic fertilisers, providing market development assistance (MDA) and grants for promoting R&D as GOBARdhan initiatives, has been introduced.

Likely Outcomes

Investment in the new urea plant in Assam aligns with the government's long-term goal of reducing dependence on fertiliser imports. The move also strengthens the agriculture sector, together with initiatives to improve crop diversification, irrigation infrastructure and farmer income.

Renewable energy

The budget allocation underscores a strong financial commitment to advancing India's clean energy vision, with a focus on solar power, green hydrogen and energy infrastructure.

Budget Announcement

The Department of Fertilisers received the major share (96.6% of the budget), followed by the Department of Pharmaceuticals (3.3%) and the Department of Chemicals and Petrochemicals (0.1%).

A new urea plant with an annual capacity of 1.27m metric tonnes is set to be established in Assam.

In compliance with the 2023-24 budget announcement, a new scheme for promoting organic fertilisers, providing market development assistance (MDA) and grants for promoting R&D as GOBARdhan initiatives, has been introduced.

Budget provision for petrochemicals includes setting up dedicated plastic parks and centres of excellence (CoEs) in polymer technology.

Achieving climate goals: Contribute significantly to India’s net-zero journey and long‑term energy security

Cleantech

The budget has set a strong foundation for India’s clean energy transition and manufacturing self-sufficiency, with key allocations for RE, EV, SMR, energy storage and power-sector reforms.

Budget Announcement

Developing at least 100GW of nuclear energy by 2047 is crucial for India’s energy transition.

Facilitating private-sector partnerships, the government will amend the Atomic Energy Act and the Civil Liability for Nuclear Damage Act.

A Nuclear Energy Mission with a budget of INR200bn (USD 2.3bn) will focus on small modular reactor (SMR) R&D, aiming for five operational, domestically developed SMRs by 2033.

Likely Outcomes

The new cleantech manufacturing mission will be a defining step towards building India’s self‑sufficiency in solar, hydrogen and storage technologies.

The target of 100GW nuclear energy by 2047 under the Nuclear Energy Mission will further accelerate the country’s transition to net zero

Industrials (steel & cement)

As private investment in the industrial sector remains robust, dependence on public-sector enterprises continues to reduce, reflected in lower budgetary outlay.

Budget Announcement

Focus on producing speciality steel through PLI. Total budgeted outlay of USD35m for FY 2025-26, a 24% y/y increase.

Additional equity injection of USD345m in publicsector enterprise RINL in FY 2025-26, after a USD971m equity injection in FY 2024-25.

Total budgetary support to the automotive sector stands at USD862m for FY 2025-26, with impetus on infrastructure development to support growth of electric mobility and expansion of the conventional automobile sector.

Likely Outcomes

The government’s strategy of infrastructure-led growth would help the industrial sector through creating domestic demand for core input such as steel, cement and aluminium. Its sustained push for expanding and transforming the mobility sector would also drive the metals sector, especially steel, to invest more in product innovation and become greener.

Automotive

Budget allocation to this sector signifies considerable financial commitment to enhancing India's automotive infrastructure and capabilities.

Budget Announcement

The allocation for the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, a two-year initiative launched in September 2024 to promote diverse electric vehicles and public charging infrastructure, has surged by over 114%, reaching INR40bn (USD461.4m) for FY 2026.

The budget allocation for the PM-eBus Sewa scheme, aimed at enhancing electric bus operations, has been increased to INR13.1bn (USD151m) in FY 2026 from INR5bn (USD58m) in FY 2025 (RE).

Likely Outcomes

The budget is expected to bolster India’s manufacturing sector and promote clean mobility. It aims to establish a comprehensive EV ecosystem, including the development of high-capacity batteries, motors and controllers, support for battery recycling and development of charging infrastructure.

Defence

Clear demonstration of the government’s strategic commitment to enhancing military preparedness

Budget Announcement

Capital budget increased by 13% to INR1,800bn (USD20.7bn) for modernising the armed forces.

Defence pensions increased by 2% to INR1,607.9bn (USD18.5bn) in FY 2025-26 from the RE of INR1,576.8bn (USD18.18bn) in FY 2024-25.

Defence R&D increased by 9% from the RE of FY 2024-25 to INR268.2bn (USD3.1bn).

The coastal guard’s budget increased by 17% from the RE 2024-25 to support the acquisition of modern equipment such ALH, Dornier aircraft and FPVs

Likely Outcomes

The budget reinforces India’s commitment to modernising its defence forces and fortifying the country’s security infrastructure, with a strong emphasis on self-reliance and technological advancements, together with maintaining operational readiness and sustaining ongoing activities.

Railways

The budget continues to drive the transformation of the sector by focusing on producing better trains, network expansion and employing safety measures and sustainability targets

Budget Announcement

Net revenue expenditure of the sector is INR3,021bn (USD34.8bn) in the BE for 2025-26 versus INR2,790bn (USD32.2bn) in the RE for 2024‑25.

Total capital expenditure allocated in the BE for 2025-26 is INR2,652bn (USD30.58bn): INR2,520bn (USD29.06bn) from general revenue, INR2bn (c.USD200m) from the Nirbhaya Fund, INR30bn (USD346m) from internal resources and INR100bn (USD1,153m) from extra-budgetary resources.

Likely Outcomes

Despite capital expenditure remaining unchanged from last year, the budget focuses on modernising transport infrastructure through higher allocations to safety, focusing on the travel experience by manufacturing new trains such as Vande Bharat, Amrit Bharat and Namo Bharat rapid rail and emphasis on sustainability, with 100% electrification and small modular reactors as a source of non-fossil energy.

---

---