The Bureau of Energy Efficiency has notified the Carbon Credit Trading Scheme (CCTS) framework, with the first compliance period commencing in FY 2026-27. This represents India’s most significant carbon pricing mechanism to date, covering energy-intensive industries including cement, iron and steel, aluminium, and pulp and paper.
Obligated entities will receive intensity-based emissions targets benchmarked against sectoral baselines. Companies that outperform their targets can sell surplus credits on a regulated exchange, while those exceeding their allocation must purchase credits or face penalties. The scheme creates a domestic carbon price signal that will reshape investment decisions across India’s industrial base.
For Indian exporters to the EU, the CCTS has an important interaction with CBAM: carbon costs demonstrably paid under India’s domestic scheme may be eligible for adjustment against CBAM obligations, reducing the effective border tax on exports. This creates a compliance incentive beyond domestic regulation alone.
RSustain’s analysis covers the obligated entity criteria, target-setting methodology, trading mechanics, and practical compliance steps.