Carbon Markets Insight Series: India

India is pursuing several measures to expedite the nation's progress towards net-zero emissions and make it carbon neutral by 2070.

India’s Carbon Credit Trading Scheme (CCTS) is a strategic initiative aimed at reducing greenhouse gas emissions through carbon pricing. It comprises two main components- a compliance mechanism for obligated entities, especially for the industrial sector and an offset mechanism to enable voluntary participation.

This insight article highlights key developments in the carbon market in India. and planned initiatives by the country.

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Way Forward

On April 11, 2025, India joined 62 nations in backing the world’s first global carbon tax on shipping, to start in 2028. The levy, charging up to $380/t for the most polluting emissions, could raise $40 billion by 2030 for maritime decarbonisation.

India’s power sector operates through three key exchanges — Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL), and Hindustan Power Exchange (HPX) — that enable efficient electricity trading and price discovery. Leveraging this expertise, they are now expected to launch carbon-credit trading platforms to support India’s decarbonisation goals.

India is also progressing with both a baseline-and-credit ETS and a national crediting mechanism to align with global carbon market shifts, reduce CBAM costs, and retain carbon revenue domestically. Thus, all these measures reflect a strong impetus for development of carbon markets (and carbon pricing) in near future.

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