India is charting a bold new path in climate governance with the rollout of its Carbon Credit Trading Scheme (CCTS), a rate-based Emissions Trading System (ETS) that marks a pivotal shift in how the world’s third-largest emitter approaches carbon pricing.
Announced in June by the Indian government, the CCTS is a cornerstone of India’s evolving carbon market infrastructure, aimed at decoupling economic growth from greenhouse gas emissions.
Balancing Growth and Compliance For Carbon Credits in India
Unlike cap-based systems, India’s rate-based ETS assigns emissions intensity benchmarks to high-emitting sectors rather than absolute caps, allowing flexibility for economic expansion while encouraging greener operations. Initially, nine energy-intensive industries will be covered.
The CCTS introduces compliance obligations for designated industrial entities and also offers a voluntary crediting pathway—laying the institutional foundation for what India calls the Indian Carbon Market (ICM). Complementing this, the government approved eight voluntary crediting methodologies in March 2025, targeting renewable energy, green hydrogen, and afforestation projects, among others.
India’s approach positions it alongside major emerging economies like China and Brazil, which have also launched national ETS programs. But by emphasizing emissions intensity over absolute limits, India seeks a more nuanced balance between development and decarbonization.
India’s Carbon Credit Policy Builds Compliance Hub, Eyes Global Competitiveness
Backed by the Energy Conservation (Amendment) Act of 2022, the scheme has a robust policy scaffold. A National Steering Committee will oversee its operation, while the Bureau of Energy Efficiency will act as a regulatory hub. Voluntary initiatives like the Green Credit Program and Mission LiFE aim to broaden participation and foster sustainable behavior.
As Europe and other regions introduce carbon border taxes, India’s ETS could help maintain trade competitiveness while progressing toward its 2030 climate goals—including 500 GW of non-fossil fuel capacity and 5 MMT of green hydrogen production.
If successful, India’s hybrid model may offer a replicable blueprint for other middle-income nations striving to align industrial ambitions with climate imperatives.
