India's Carbon Market Moves from Policy Design to Its First Compliance Test

India's Carbon Credit Trading Scheme (CCTS) has crossed from legal design into its first live compliance cycle. As of September 2026, an estimated 490 entities across seven energy-intensive sectors, including aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals, and textiles, carry legally binding greenhouse gas emission intensity targets, and the scheme's first Form A submission deadline of July 31, 2026 has already passed.

The shift matters because CCTS is India's first legislated compliance carbon market, distinct from the voluntary offset activity that has dominated the country's carbon landscape until now. With coverage expected to exceed 700 million tonnes of CO2 equivalent once all nine notified sectors are active, it places India among the largest emissions trading systems globally and gives industrial companies a direct, tradeable cost of carbon for the first time.

This article explains what has changed operationally, who is now covered, and what businesses and investors should watch as certificate trading approaches.

CCTS traces back to the Energy Conservation (Amendment) Act, 2022, which empowered the central government to establish a carbon credit trading mechanism. The scheme was formally notified in June 2023, creating an institutional framework anchored by the National Steering Committee for the Indian Carbon Market, with the Bureau of Energy Efficiency (BEE) as administrator.

Before CCTS, energy-intensive industries operated under the Perform, Achieve and Trade (PAT) scheme, launched in 2012, which targeted energy efficiency rather than emissions directly. CCTS represents a gradual transition away from PAT toward an intensity-based baseline-and-credit carbon market: instead of capping absolute emissions, entities are assigned targets for greenhouse gas emission intensity, measured as tonnes of CO2 equivalent per unit of product output, benchmarked against a fiscal year 2023-24 baseline.

In July 2024, BEE published its Detailed Procedure for the compliance mechanism, setting out monitoring, reporting, and verification requirements. Sector-specific targets followed later: the first four sectors, aluminium, cement, chlor-alkali, and pulp and paper, were notified in October 2025, with petroleum refining, petrochemicals, and textiles added in January 2026. Targets for iron and steel and fertilizers remain pending.

CCTS has moved from a legislative framework into an operating compliance market, with binding targets, a completed first filing deadline, and trading infrastructure now in place for roughly 490 industrial entities.

The scheme's credibility will be tested in the months ahead, as BEE processes verified filings, certificates begin changing hands, and the government works toward bringing iron and steel, fertilizers, and additional sectors under the same compliance regime.