Government Expands Indian Carbon Market Compliance Coverage

In January 2026, the Government of India notified Greenhouse Gas Emission Intensity (GEI) targets for additional carbon-intensive sectors under the Carbon Credit Trading Scheme (CCTS).

Key Points

New Sectors Covered: The notification brings petroleum refineries, petrochemicals, textiles, and secondary aluminium under the compliance mechanism of the Indian Carbon Market (ICM).
Compliance Expansion: A total of 208 obligated entities across these sectors will now be required to meet specified emission intensity reduction targets.
Expanded Obligated Entities: With the new inclusion, 490 obligated entities across India’s most emission-intensive sectors must now meet prescribed GEI reduction targets.
Earlier Coverage: The first batch of GEI targets was notified in October 2025 for Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors, covering 282 entities.
About CCTS: Notified in 2023, the CCTS provides the operational framework for the Indian Carbon Market, aiming to reduce or avoid greenhouse gas emissions by placing a cost on carbon through a tradable credit system.
Market Mechanisms: The CCTS operates via two components:
- Compliance Mechanism: Designated industries must meet assigned GEI targets.
- Offset Mechanism: Entities exceeding targets earn Carbon Credit Certificates, which can be traded with non-compliant entities.
Incentives for Over-Performance: Industries achieving reductions beyond mandated levels can generate tradable credits, creating financial incentives for deeper decarbonisation.