India is preparing to introduce its first domestic carbon market by mid-2026, a move aimed at curbing industrial emissions while aligning with global climate regulations. Power Minister Manohar Lal confirmed the timeline, highlighting the program’s potential to incentivize cleaner energy use across industries.
“India will soon launch its independent carbon market, expected by mid-2026. Under this system, businesses relying on fossil fuels will be required to purchase carbon credits, while those utilizing renewable energy sources can earn credits to sell,” the minister stated.
A Strategic Move to Support Exporters Amid Global Carbon Policies
The initiative is particularly crucial for Indian exporters, who face increasing pressure to comply with international climate regulations. With mechanisms like the European Union’s Carbon Border Adjustment Mechanism (CBAM) imposing tariffs on carbon-intensive imports, Indian manufacturers—especially in steel and cement—are looking for ways to stay competitive. 
By introducing a structured carbon trading system, India aims to encourage industries to adopt greener practices while mitigating the financial impact of global carbon tariffs. “Adhering to international carbon norms is no longer optional for businesses operating in global markets,” Lal added.
Legislation and Market Framework
India laid the groundwork for its carbon market with the Energy Conservation (Amendment) Bill of 2022. The legislation established a regulatory framework for trading carbon credits, enabling companies to buy and sell allowances based on their emissions footprint.
Stakeholders in various sectors have been closely watching the rollout of this program, which is expected to accelerate India’s shift to a low-carbon economy. By linking financial incentives with sustainability goals, the carbon market will not only reduce emissions but also strengthen India’s position as a key player in the evolving global green economy.
