Union Budget 2025

Sector Overview

• Oil and gas

  • India is the world’s third-largest consumer of crude oil and a major growth centre for demand.

  • Its E&P sector offers investment opportunities worth USD100bn by 2030.

  • With 23 refineries and total capacity of c.250 MMTPA, it is the world’s fourth-largest refining hub.

  • It currently has c.25,000km of operational and 11,000km of under-construction natural gas pipelines, with 14m PNG customers and c.750 CNG outlets.

  • It also has an extensive network of over 10,400km of crude oil pipelines and over 24,100km of petroleum product pipelines. The country serves 329m active LPG customers and has more than 93,800 petroleum retail outlets.

  • It is the world’s fourth-largest LNG importer and has a regasification capacity of c.53 MMTPA. LNG accounts for c.50% of its gas demand.

• Chemicals and fertilisers

  • India is the world’s second-largest producer and consumer of fertiliser and the sixth-largest producer of chemicals.

  • Fertiliser production reached c.22m MT (N+P2O5) in 2023-24, marking a 6% increase from 2022-23. Despite this increase, India continues to depend on imports for c.30% of its fertiliser needs.

  • The chemical sector, currently valued at USD220bn, is poised for significant growth and is expected to reach USD300bn by 2030 and USD1tn by 2040, underpinned by strategic government initiatives and policies.

• Renewable energy

  • The renewable energy sector is pivotal to India's energy transition and net-zero ambitions. This is underscored by the government's budgetary allocation, which has surged by over 900% since FY 2021.

  • Solar energy (with 97GW) and wind energy (with 48GW) have been the primary drivers of the sector’s growth, collectively accounting for c.90% of the total installed renewable energy capacity as of December 2024.

  • Given the significant penetration of renewable energy, emerging technologies such as green hydrogen, energy storage and smart grids are becoming essential for ensuring long-term energy security and reliability in India.

• Cleantech

  • India’s nuclear power generation capacity has grown significantly in the past decade, nearly doubling from 4,780MW in 2014 to 8,180MW in 2024.

  • The capacity is projected to triple to 22,480MW by 2031-32, showcasing India’s commitment to scaling up its nuclear energy infrastructure.

  • Through Project Bhavani, India is working towards using its abundant thorium reserves, which constitute 21% of the world’s resources. The programme aims to reduce dependence on imported uranium and other materials.

• Industrials

  • India’s industrial sector, mainly steel and cement, has played a pivotal role in stabilising the country’s industrial growth. It is the world’s second-largest producer of steel and cement after China.

  • Being the core input sectors, both sectors have benefited significantly from the country’s infrastructure-focused growth strategy. Construction and infrastructure accounted for an estimated 68% of total finished steel consumption of 140m MT in FY 2024. Engineering and packaging, and automobiles were the second- and third-largest consumers, respectively, accounting for 22% and 9% of total finished steel consumption.

• Automative

  • The automotive sector is a key driver of technological advancement, economic growth and job creation in India.

  • It accounts for c.7% of the country's GDP and c.49% of the country’s manufacturing GDP.

  • In 2023-24, India produced approximately 4.9m passenger vehicles, 999,000 three-wheelers, 21.47m two-wheelers and 1.07m commercial vehicles, highlighting the sector's strong production capabilities and growing domestic demand for vehicles.

• Defense

  • India’s military expenditure is the world’s fourth highest.

  • Domestic defence production increased by 17% in FY 2023-24 from FY 2022-23.

  • Defence exports grew 32.5% over FY 2022-23 to INR210.8bn (USD2.4bn).

  • The Defense Acquisition Council (DAC) and the Defense Procurement Board (DPB) accorded an acceptance of necessity (AoN) for 40 capital acquisition proposals in 2024 (to November 2024), amounting to INR4,221.3bn (USD48.7bn).

  • More than 500 schemes have been planned for acquiring potent fighting capability in the next 15 years.

• Railways

  • India has the world’s fourth-largest rail network, with1,06,493km in tracks in FY 2023 and 7,325 railway stations.

  • The Ministry of Railways estimates that it will carry the world’s second-largest amount of freight, with a target of 1.6bn tonnes of cargo by the end of FY25.

  • Passenger traffic in FY 2024 (estimate: 7.5bn) grew 8% from FY 2023.

  • India has electrified 97% of its rail network and aims for 100% electrification by 2030.

  • More than 80% of reserved ticketing is conducted through digital platforms.