India’s Carbon Credit Trading Scheme | CCTS
India’s First Mandatory Carbon Market Just Went Live for Seven Sectors. Most Boardrooms Haven’t Noticed Yet.
Compliance obligations under India’s Carbon Credit Trading Scheme are now legally binding for roughly 490 industrial units across seven sectors. The first actual trades are expected by mid-2026. For an export-facing company, this stopped being a policy conversation the moment the EU’s carbon border tax became real.
What Happened
India’s Carbon Credit Trading Scheme (CCTS), the country’s first mandatory cap-and-trade-style system for greenhouse gas emissions, has moved from design into force. Compliance obligations are now active for seven of the nine sectors initially covered: aluminium, cement, chlor-alkali and pulp & paper (notified in October 2025), followed by petroleum refining, petrochemicals and textiles (notified in January 2026). Together these cover roughly 490 industrial units and an estimated 16% of India’s total greenhouse gas emissions.
The scheme replaces the older Perform, Achieve and Trade (PAT) programme, which measured energy consumption. CCTS measures actual emissions intensity, tonnes of CO2-equivalent per unit of production, against a facility-specific baseline drawn from FY 2023–24 data. Facilities that beat their target earn tradeable Carbon Credit Certificates (CCCs); facilities that miss it have to buy credits or face penalties. Targets are legally binding for compliance years FY 2026 and FY 2027, and a parallel voluntary Offset Mechanism is already operating for non-obligated sectors like farming and forestry. The first actual CCC trading is expected to launch by mid-2026, with steel, fertilisers and several other sectors still awaiting their own targets in the coming months.
Why It Matters
The timing isn’t a coincidence. 2026 is also the year the European Union’s Carbon Border Adjustment Mechanism (CBAM) begins taxing imports based on their embedded carbon footprint. Without a domestic carbon price, Indian exporters in CBAM-covered sectors, several of which overlap directly with CCTS’s first-phase sectors would simply pay that carbon cost to the EU instead. With a functioning domestic scheme, at least some of that cost can be captured and priced at home rather than exported to another government’s treasury.
That reframes CCTS from a compliance exercise into something closer to an economic survival question for exporters in these sectors. A facility that treats its emissions-intensity target as a reporting obligation to satisfy once a year is missing that the certificates it earns or owes are about to have a real, tradeable market price.
What’s Next
Early price estimates for CCCs range from roughly ₹250 to ₹1,500 per tonne, depending on sectoral supply and demand once trading opens. A July 2026 deadline for Measurement, Reporting and Verification (MRV) data submission is the next concrete milestone facilities need to hit before the first trading window. The trading platform rules themselves under India’s Central Electricity Regulatory Commission are still being finalised. Steel, fertilisers, and eventually aviation, ports, railways and data centres are expected to be added in subsequent phases.
Sources: International Carbon Action Partnership (ICAP) sector-notification tracking and compliance updates; Bureau of Energy Efficiency scheme design as summarised by IETA’s CCTS Business Brief and the India CCTS 2026 Guide; CBAM linkage and CCC pricing estimates as reported by Lawrbit and the Indian Carbon Market’s 2026 CCTS guide.
