India Expands Carbon Credit Scheme to Combat Emissions
The Government of India has taken a significant step towards reducing greenhouse gas emissions by notifying new targets under the Carbon Credit Trading Scheme (CCTS). As of January 13, 2026, sectors such as Petroleum Refineries, Petrochemicals, Textiles, and Secondary Aluminium are now included in the compliance framework of the Indian Carbon Market (ICM). This expansion is part of a broader initiative to address carbon intensity across various high-impact industries.
Broader Compliance Framework
With this recent update, a total of 208 entities across the newly included sectors are required to adhere to specific emission intensity reduction targets. This updated inclusion increases the total number of obligated entities under the ICM to 490, reflecting the government’s ongoing effort to address emissions from India’s most carbon-intensive industries. Previously, in October 2025, the government had established GEI targets for Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors, encompassing 282 obligated entities.
Structure of the CCTS
Implemented in 2023, the CCTS provides a comprehensive framework for the ICM, aimed at reducing greenhouse gas emissions by establishing a carbon pricing mechanism. The key objective of this scheme is to incentivize emissions reductions across various sectors of the Indian economy.
The CCTS operates through two distinct mechanisms: the Compliance Mechanism and the Offset Mechanism. Under the Compliance Mechanism, industries identified as Obligated Entities must meet their assigned Greenhouse Gas Emission Intensity (GEI) targets. Those entities that exceed their targets can earn Carbon Credit Certificates, which they may trade with other obligated entities that struggle to meet their own targets.
Collaborative Efforts for a Sustainable Future
This initiative embodies years of dedicated dialogue with industry leaders, comprehensive technical assessments, and coordinated efforts across various stakeholders. As the compliance mechanism evolves and expands, the ICM is set to play a pivotal role in fostering industrial growth that aligns with India’s long-term climate objectives and its commitment to achieving net-zero emissions.
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