What Is India's Carbon Credit Trading Scheme (CCTS)?

Roughly 450 of about 750 industrial plants originally in line for India's compliance carbon market have no obligation at all for its first year. Seven sectors have notified targets; five of them carry targets for FY2025-26. And trading, once expected by mid-2026 and then around October, is now indicated by the scheme's own administrator for the end of calendar year 2027.

The scheme is real, legally binding and running. It is also considerably thinner in its first compliance year than the sector list suggests, and anyone describing it from the notifications alone will describe something that no longer exists.

What The Scheme Is

The Energy Conservation (Amendment) Act 2022 amended the Energy Conservation Act 2001 to create the legal basis for carbon credit certificates. The scheme itself was notified on 28 June 2023, with detailed compliance regulations following in July 2024, which makes it about three and a half years old and not yet trading.

Responsibility is split. The National Steering Committee for the Indian Carbon Market, co-chaired by the Ministry of Power and the Ministry of Environment, Forest and Climate Change, oversees the market. The Bureau of Energy Efficiency administers the scheme and issues certificates. The environment ministry designates covered entities and notifies targets, on the power ministry's recommendation. Grid Controller of India operates the registry, and the Central Electricity Regulatory Commission regulates trading.

Mechanically it is a baseline-and-credit system built on intensity rather than an absolute cap. Covered scope is gate-to-gate, taking in Scope 1 and Scope 2 emissions and covering carbon dioxide and perfluorocarbons. One certificate represents one tonne of carbon dioxide equivalent. Certificates are issued by the Bureau to entities that beat their targets, and are not auctioned.

The compliance period is the Indian financial year, running 1 April to 31 March, with performance assessment due within four months of year end. For FY2025-26 that put the Form A filing deadline at 31 July 2026.

What It Replaces

For many obligated entities this is not a first encounter with a traded compliance instrument. India has run the Perform, Achieve and Trade scheme for industrial energy efficiency for over a decade, and a gradual transition from it to the CCTS began in 2025.

The shift changes the unit of account. The older scheme measured and traded energy performance; the CCTS measures emission intensity and trades tonnes of carbon dioxide equivalent. For a plant that already holds designated consumer status, much of the metering, the reporting discipline and the internal ownership transfers directly. The emission factors, the gas coverage including perfluorocarbons, and the gate-to-gate boundary do not.

That distinction is worth making explicit internally, because a team that treats the CCTS as the old scheme renamed will arrive at the right process with the wrong numbers.

The Seven Notified Sectors, And Where They Stand Now

The September amendment lifted FY2025-26 obligations from 21 refinery units, including Indian Oil facilities, Reliance Industries' Jamnagar refinery and Nayara Energy's Vadinar plant, and from 173 textile and fibre units concentrated in Gujarat, Tamil Nadu and Rajasthan. Industry sources attribute the change to the conflict in West Asia, with refiners unable to pass higher crude sourcing costs to consumers and the export-oriented textile sector under pressure. The Bureau's director declined to comment on the amendment.

Two of the nine sectors originally proposed still have no notified targets. A draft for iron and steel was issued on 26 June 2026 with comments closing in late August; an industry official has said steel effectively received an FY2025-26 waiver because targets cannot be set retroactively, and the 255 steel units concerned emitted around 360 million tonnes of carbon dioxide equivalent in FY2023-24. Fertiliser has had no notification.

That leaves roughly 295 units across five sectors carrying FY2025-26 targets, out of a population once put at about 750.

How Targets Work

Targets are facility-specific greenhouse gas emission intensity values, set at sub-sector level, expressed per unit of output rather than as an absolute tonnage. The baseline is FY2023-24.

Reported stringency is modest. FY2025-26 requires an intensity cut of roughly 1 to 3 per cent against that baseline, and FY2026-27 roughly 2 to 8 per cent. Because the targets are intensity-based, a plant can increase absolute emissions while complying, provided output rises faster.

The calibration is deliberate. The Bureau's director has said targets were set to keep carbon costs at around 10 US dollars a tonne, against 70 to 140 dollars in the European Union, which is a seven to fourteenfold difference and the clearest signal available about how the scheme is intended to bite in its early years.

Verification, Certificates And Penalties

Emissions reports must be verified by a carbon verification agency accredited by the Bureau of Energy Efficiency. Covered entities register on the national registry operated by Grid Controller of India, and entities outside the scheme may register if they wish to trade.

Entities that beat their intensity target receive certificates. Entities that fall short must surrender one compliance unit for each tonne of excess emissions, met either from banked certificates or by purchase.

Failure to surrender triggers an environmental compensation order from the Central Pollution Control Board, set at twice the average certificate trading price for that compliance year, with reported fines of up to 10 lakh rupees per instance alongside. Note the structural problem in that penalty for a first cycle: a charge defined as twice the average trading price presupposes a trading price, and trading has not begun.

Trading Status

This is the part most summaries get wrong, because the expected date has moved three times.

Trading has not started. An assessment in February 2026 expected the first certificate trading by mid-2026. Indian trade coverage on 2 September 2026 reported the first trades as then expected around October. Reporting on 4 November 2026 cited the Bureau's director saying carbon trading would begin for most sectors by the end of calendar year 2027.

When it does begin, the architecture is settled. Certificates will trade on the power exchanges, with the Indian Energy Exchange, Power Exchange India and Hindustan Power Exchange named, under Central Electricity Regulatory Commission oversight, and over-the-counter trading will not be permitted at launch. Early price estimates have been put in the range of 250 to 1,500 rupees a tonne.

The reasons given for the delay are worth noting because they are not purely technical. Analysts point to the volume of exemptions, with about 450 of roughly 750 plants carrying no FY2025-26 obligation, and to repeated amendments producing delays and modest targets that weaken confidence in the market. Execution risk is also real, with measurement systems, registry infrastructure and a first live compliance cycle all landing in the same period.

The Offset Mechanism

Alongside the compliance market sits a voluntary offset mechanism allowing entities outside the scheme to register eligible projects and earn certificates, with roughly 40 projects registered or submitted.

One point to be precise about, because published summaries conflict. Trade reporting states that offset credits cannot be used for compliance. At least one international tracker simultaneously describes offsets as not allowed under the flexibility provisions and describes a domestic crediting mechanism as under development. The safe reading for a covered entity is that the compliance obligation must be met with compliance certificates, and anyone planning otherwise should confirm it with the Bureau.

What It Means For Companies

For a covered entity, three things follow.

The obligation is live even where the target is not. The registry, the measurement systems and the verification relationship are the slow parts of this, and the sectors granted an FY2025-26 reprieve have FY2026-27 targets already notified. Refiners and textile units gained a year, not an exemption.

Intensity accounting changes what you track. A target expressed per unit of output means production volumes and product mix sit inside the compliance calculation, so the data owner is operations rather than the sustainability function alone.

And for anyone outside the scheme, the direction is clear even if the dates are not. Iron and steel have a published draft, fertiliser is expected, and the sectoral perimeter has only moved outward since 2023 even as individual obligations have been deferred.

For exporters, the carbon cost gap matters separately. A scheme calibrated near 10 dollars a tonne sits far below the European range, which is the arithmetic underneath any discussion of how Indian compliance costs interact with carbon border measures abroad.

Position as of 12 November 2026. This article is based on an international emissions trading tracker's scheme profile and news item and on Indian trade and business press reporting, not on the Carbon Credit Trading Scheme notification, the compliance regulations or the target notifications themselves, so gazette references are not cited and every figure should be confirmed against the official instruments and the Bureau of Energy Efficiency before being relied on. Entity counts differ between sources, with roughly 490 units across seven sectors cited in February 2026 and roughly 750 across nine sectors cited later; the figures used here are reproduced as reported and have not been reconciled by the publishers. The amendment of 7 September 2026 is reported in Indian business press and its gazette reference was not located. Target stringency ranges, the indicative carbon cost figure and early price estimates are as reported and are not official projections. No source consulted confirms that certificate trading has begun or that any certificates have been issued, and the absence of such confirmation is not proof either way. The attribution of the refinery and textile amendment to conflict in West Asia is as reported by industry sources in that coverage. Nothing here is legal, regulatory, accounting or trading advice, and obligated entity status and compliance decisions should be determined with qualified advisers.

Sources

Bureau of Energy Efficiency, Ministry of Environment, Grid Controller of India, Central Electricity Regulatory Commission, International Carbon Action Partnership, Business Standard, SaurEnergy

This article is intended for general professional information and does not constitute legal, financial, or investment advice.