Scheme for Setting Up of Plastic Parks is a central government scheme run by the Department of Chemicals and Petrochemicals under the Ministry of Chemicals and Fertilizers. It offers grant-in-aid up to 50% of the project cost, capped at ₹40 crore per project, to build modern plastic parks through a cluster development approach. As of 2026, the department has approved 10 plastic parks in different states under this scheme.
The scheme works under the umbrella of the New Scheme of Petrochemicals. Its main aim is to raise the competitiveness, polymer absorption capacity and value addition of the domestic downstream plastic processing industry. A plastic park is an industrial zone made for plastic related businesses, with common facilities such as effluent treatment plants, waste management systems, recycling sheds, testing units and training centres.
Scheme for Setting Up of Plastic Parks - Introduction
The scheme supports setting up need-based plastic parks with modern infrastructure and common facilities. State governments or their agencies form a Special Purpose Vehicle (SPV) with plastic sector enterprises to run the project. The SPV must register as a company, hold the project land, and mobilize equity before the final approval. The Scheme Steering Committee supervises the whole process.
So far, 10 plastic parks have been approved across states including Madhya Pradesh, Odisha, Assam, Tamil Nadu, Jharkhand, Uttarakhand, Chhattisgarh, Karnataka and Uttar Pradesh. The grant released to these parks up to 31 March 2026 shows the scheme is being implemented on the ground. The department also invites fresh proposals from state governments to set up new parks from time to time.
Key Information
| Scheme Name | Scheme for Setting Up of Plastic Parks |
|---|---|
| Level | Central |
| Nodal Ministry | Ministry of Chemicals and Fertilizers |
| Nodal Department | Department of Chemicals and Petrochemicals |
| Beneficiary States | All states |
| Grant Support | Up to 50% of project cost, capped at ₹40 crore |
Benefits
The scheme gives financial support to approved projects through a one-time grant-in-aid. The details of what this grant covers are given below.
- Up to 50% of the project cost is given as grant-in-aid, capped at ₹40 crore per project.
- At least 25% of the grant must be spent on common facility centres such as recycling, testing and training units.
- Up to 5% of the grant covers administrative support, including the CEO salary.
- Up to 5% of the grant is allowed for expert and engineering fees.
- Up to 75% of the cost of soft interventions like skill development is covered, up to ₹50 lakh.
Grant is released in instalments. A 20% mobilization advance comes after project approval and submission of a bank guarantee. Then 35% is released after 60% use of the first instalment, another 35% after full use of the first and 60% of the second instalment, and the final 10% after at least 25% of park units become operational.
Eligibility
Only a Special Purpose Vehicle formed for the park can apply under this scheme. The conditions that must be met are listed below.
- The SPV must be formed by a State Government or its agency in partnership with plastic sector enterprises.
- The SPV must be registered as a company under the Companies Act.
- The SPV must hold legal ownership or registration of the project land.
- The State Government or its agency must put in at least 26% of the SPV cash equity.
- Members must mobilize at least 20% of the equity before final approval.
- The SPV must keep an Escrow or Trust and Retention Account in a Schedule A Bank.
- Formal share subscription agreements must be signed between the SPV and all member enterprises.
Application Process
State governments interested in setting up a plastic park need to go through the following steps.
STEP 1 - The State Government or its designated agency studies local needs and prepares a preliminary project proposal with the proposed location, broad cost estimates and project readiness.
STEP 2 - The state agency submits the proposal to the Department of Chemicals and Petrochemicals.
STEP 3 - The Scheme Steering Committee reviews the proposal and gives tentative in-principle approval, which stays valid for six months.
STEP 4 - The SPV prepares and submits a Detailed Project Report (DPR) within the six-month window.
STEP 5 - A Programme Manager checks the DPR for financial viability and socioeconomic impact.
STEP 6 - The Scheme Steering Committee gives final approval based on the appraisal, and grant-in-aid payment begins.
Documents
Applicants need to keep the following papers ready while applying for the scheme.
- Preliminary proposal covering project location, agency background and cost estimates.
- Detailed Project Report.
- Signed share subscription agreements.
- Final sanction letters from financial institutions for external funding.
References
Official Plastic Park Scheme page
FAQ's
What legal structure is required for the project entity?
The entity must be a distinct legal body, normally registered as a company under the Companies Act.
How is the grant money managed?
The SPV must keep a dedicated Escrow or Trust and Retention Account with a Schedule A Bank.
What is the deadline for project completion?
The project must be completed within three years from the date of final approval.
Are there benefits for certain types of manufacturing?
Projects focusing on medium and high end manufacturing get priority during the approval process.
Can we restrict use of common facilities?
No, common facility centres must serve the broader industrial cluster, not just SPV members.
What if the project is partially implemented?
The central grant may be taken back with penal interest if the project is incomplete or fails to meet quality standards.