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ARTICLE · 07 JUNE 2026

Trading Boundaries In The Indian Carbon Market

Lakshmikumaran & Sridharan
Lakshmikumaran & Sridharan
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Lakshmikumaran & Sridharan

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India's Carbon Credit Trading Scheme establishes distinct market segments for obligated and non-obligated entities, but the regulatory framework leaves critical ambiguities about whether carbon credits can be traded across these boundaries.

IndiaEnvironment
Prabal Karthikheyan
Prabal Karthikheyan
Jass Bindra
Jass Bindra
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The Indian Carbon Market operates under the Carbon Credit Trading Scheme (‘CCTS’), implementing a market‑based carbon pricing mechanism to drive emission reduction. This market-based greenhouse gas emission (‘GHGE’) reduction framework is bifurcated into the offset market and compliance market. The offset market governs non-obligated entities, registered with the Indian Carbon Market (‘ICM’). The offset market is voluntary in nature, allowing non‑obligated entities to register activities that result in GHGE reduction, avoidance, or removal for the issuance of Carbon Credit Certificates (‘CCCs’)1. In contrast, the compliance market governs obligated entities, that are high greenhouse gas emitters mandated to meet prescribed GHGE intensity targets. The Government has identified nine energy-intensive sectors namely, Aluminium, Cement, Steel, Paper, Chlor-Alkali, Fertilizer, Refinery, Petrochemical, and Textile, which are brought within the ambit of compliance market2. Obligated

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