India's CCTS Is Between Compliance and Trading

At a glance

The obligation

What is actually binding today

Compliance obligations under India's Carbon Credit Trading Scheme are in force for approximately 490 entities across seven energy-intensive sectors, following notification of greenhouse-gas emission-intensity targets by the Ministry of Environment, Forest and Climate Change. The notification came in two waves: aluminium, cement, chlor-alkali and pulp and paper in October 2025, then petroleum refining, petrochemicals and textiles in January 2026.

Three features of the target design matter more than the headline count. Targets are set at sub-sector level, not plant by plant. They are expressed as intensity — tonnes of CO₂e per unit of output — rather than as absolute caps, so a facility can grow production without breaching, provided efficiency improves. And they are measured against a fiscal 2023-24 baseline, covering the compliance years 2025-26 and 2026-27.

Entities that outperform their target receive tradeable Carbon Credit Certificates. Entities that fall short must purchase and surrender an equivalent number. The first compliance date for the 2025-26 year was 31 July — a date that has passed.

Two of the nine sectors initially scoped remain outside the binding set: iron and steel, and fertiliser. Final targets for both are still pending, which means the two largest remaining industrial emitter groups are not yet inside the scheme.

Where the exposure sits

The gap between obligation and venue

The Indian Carbon Market Portal, launched on 21 March 2026, is the scheme's digital backbone. It runs the end-to-end process from entity registration through to certificate issuance, including validation, verification and the accreditation of third-party monitoring, reporting and verification bodies. It serves both obligated and non-obligated entities.

What the portal does not settle is when certificates begin changing hands. The International Carbon Action Partnership's jurisdiction record, updated 30 March 2026, said first CCC trading was expected by mid-2026. Secondary market guides published later place exchange trading in October 2026. Those two statements cannot both be current, and Climate Decode has not found a primary notification fixing the date.

For an obligated entity close to its benchmark, this is the operative problem: the quantity of the shortfall is already determined by a performance year that has closed, but the cost of covering it is unobservable. That is an unusual and uncomfortable position, and it argues for quantifying exposure in tonnes now rather than waiting for a price signal that may arrive late.

Cross-border

The Article 6 hooks are the structural story

The more interesting long-term feature of the portal is that it includes provisions for interacting with international carbon markets under Article 6 of the Paris Agreement, allowing project developers to register activities intended for cross-border crediting.

A domestic compliance instrument with a documented route to cross-border crediting is unusual. It places Indian project developers in two markets simultaneously — the domestic compliance market created by the CCTS, and the bilateral Article 6.2 market where host-country authorisation is the binding constraint on supply everywhere else. Whether those two demand pools compete for the same tonnes, or the scheme partitions them, is not yet visible in the published rules.

Outlook

What to watch next

Iron and steel, and fertiliser notifications. These bring the two largest remaining industrial emitter groups inside the scheme and will materially change the size of both the obligation pool and the certificate supply.

A primary notification fixing the trading start. Until a date is published through the portal or by the Bureau of Energy Efficiency, treat every circulating date as unconfirmed.

The first issuance. Certificate supply depends on how many entities outperformed against a sub-sector benchmark in its first year. A thin first issuance against a large deficit pool would be the condition for a tight opening market.

How the Article 6 provisions are operationalised. The portal describes the capability; the rules governing which activities may be authorised for export, and on what terms, are the thing to read when they appear.

Sources