By establishing greenhouse gas emission intensity (GEI) targets for 208 additional carbon-intensive industrial units, the government has expanded the reach of the Indian carbon market. With this change, the nation’s carbon compliance system now covers more industries.
Expansion of India’s Carbon Compliance Framework
Petroleum refineries, petrochemicals, textiles, and secondary aluminum are now subject to the Carbon Credit Trading Scheme (CCTS) compliance mechanism, which requires businesses to either purchase carbon credits to offset excess emissions or satisfy emission objectives.
With this most recent addition, the Indian carbon market’s compliance structure now covers 490 required organizations from the nation’s most emission-intensive industries. The government announced GEI targets for 282 obligated entities in the aluminum, cement, pulp and paper, and chlor-alkali sectors earlier in October 2025.
Shift From Voluntary Climate Action to Mandatory Accountability
“Petroleum, petrochemicals, textiles, and secondary aluminum under compliance mechanism of the Indian carbon market marks a decisive shift from voluntary climate action to accountable, economy-wide decarbonization.” According to Manish Dabkara, president of the Carbon Markets Association of India and chairman and managing director of EKI Energy Services, “this is no longer about a few early movers, but about integrating carbon efficiency into the core of India’s industrial growth.”
India is indicating that carbon performance will now influence competitiveness, finance access, and long-term resilience by extending GEI targets to 490 of the nation’s most emission-intensive companies. He continued, “This framework offers India the architecture to deliver, but the real test ahead will be execution, data integrity, and market discipline.”
🌱 India Carbon Compliance Program Expansion
- New Units Added: 208 carbon-intensive industries
- Total Obligated Entities: 490
- New Sectors Covered: Petrochemicals, textiles, refineries, secondary aluminum
- Compliance Tool: Carbon Credit Trading Scheme (CCTS)
- Key Metric: Greenhouse Gas Emission Intensity (GEI)
Carbon Credit Trading Scheme Explained
Notified in 2023, the Carbon Credit Trading Scheme offers a broad framework for the operation of the nation’s carbon market. By putting a price on emissions through a market-based carbon credit trading system, the program seeks to cut or eliminate greenhouse gas emissions in a number of Indian economic sectors.
The offset mechanism and the compliance mechanism are the two ways that the CCTS operates. Designated emission-intensive industries, referred to as obligated entities, must meet specified GEI reduction targets under the compliance mechanism. Carbon Credit Certificates are given to organizations who surpass their goals and can be sold to organizations that do not meet their obligations.
⚖️ Compliance vs Offset Mechanism
- Compliance Mechanism: Mandatory for high-emission industries
- GEI Targets: Legally binding emission intensity reductions
- Offset Mechanism: Voluntary participation
- Eligible Activities: Renewables, energy efficiency, afforestation
- Outcome: Tradeable Carbon Credit Certificates
Industry Impact and Net-Zero Transition
Experts claim that the announcement of GEI targets for carbon-intensive industries is a significant and timely step to hasten India’s transition to net zero. Industry adoption of quantifiable and dependable emission reduction strategies will be required by compliance.
Battery energy storage systems, high-performance HVAC (heating, ventilation, and air conditioning), and on-site renewables can all directly reduce expenses and emissions. For early adopters, the shift will include more than just compliance; it will also involve strengthening long-term resilience and boosting their competitiveness internationally.
Energy Efficiency and Clean Technology Adoption
The future will involve electrification, efficiency improvements, and more intelligent energy management, according to Piyush Goyal, co-founder and CEO of Volks Energie.
Volks Energie offers integrated energy solutions, with a focus on HVAC systems and solar power (installation, design, and maintenance).
Government Strategy and Market Evolution
The government claims that the increased sectoral coverage is a result of ongoing industry involvement, thorough technical evaluations, and concerted efforts by institutions and stakeholders. The Indian carbon market is anticipated to be crucial in striking a balance between industrial expansion, India’s long-term climate goals, and its net-zero emissions route as the compliance system expands and develops.
Offset Opportunities for Non-Obligated Entities
By creating initiatives that lower, decrease, or eliminate greenhouse gas (GHG) emissions, non-obligated entities—those not directly governed by CCTS targets—can earn carbon credit certificates under the CCTS’s offset mechanism. It encourages initiatives in sectors including afforestation, energy efficiency, and renewable energy, enabling companies to make money from confirmed reductions in emissions, supporting sustainable development, and helping India reach its net-zero targets.
In order to achieve net-zero emissions by 2070, India has established a goal to balance greenhouse gas emissions with removals.
Frequently asked questions
1. What is the Carbon Credit Trading Scheme (CCTS) in India?
In order to lower greenhouse gas emissions, the government-backed CCTS market mechanism was introduced in 2023. It gives carbon emissions a price and enables businesses to exchange carbon credit certificates according to how well they perform in terms of emissions.
2. Which new industries are now subject to the carbon compliance system?
The sectors of textiles, secondary aluminum, petrochemicals, and petroleum refineries have all been added. This update includes 208 more industrial facilities that are subject to statutory emission reduction goals.
3. What are the targets for Greenhouse Gas Emission Intensity (GEI)?
The GEI objectives quantify the quantity of greenhouse gas emissions generated per unit of output. In order to fulfill government-mandated targets, obligated entities must lower their emission intensity.
4. What happens if a business does not reach its GEI goals?
In order to ensure overall emission reductions across sectors, an entity that falls short of its targets must buy Carbon Credit Certificates from companies that have surpassed their targets.
5. What distinguishes the compliance mechanism from the offset mechanism?
While the offset method is optional, the compliance mechanism is required for high-emission industries. By working on initiatives like afforestation, energy efficiency, and renewable energy, non-obligated organizations can obtain carbon credits.
Conclusion
The expansion of the carbon compliance framework to 490 emission-intensive industrial organizations in India is a significant step toward responsible and comprehensive decarbonization. The government is integrating carbon efficiency into industrial growth by going beyond voluntary participation and mandating GEI targets across important industries.
The enhanced Carbon Credit Trading Scheme gives India a strong framework to reconcile economic development with its long-term climate obligations and its net-zero aim for 2070, even though efficient execution, precise data reporting, and market discipline would be essential.
Disclaimer
This article is for informational purposes only. It does not constitute financial, legal, or regulatory advice. Readers should consult official government notifications or professional advisors before making any decisions based on this content.
