India Inc is preparing for a fundamental shift in how it approaches emissions reduction as the country's compliance carbon market moves towards launch later this year. According to reports from Mint's Sustainability Impact Summit 2026, companies that have largely relied on reducing emissions within their own operations are expected to increasingly use carbon credits to tackle residual emissions on the path to India's 2070 net-zero target. With active trading under the Carbon Credit Trading Scheme (CCTS) scheduled to begin in the fourth quarter of 2026, industry experts and ratings officials said the regulatory architecture is falling into place.
For Indian corporations, decarbonization strategies have so far prioritized direct operational abatement over market offsets. Nikunj Dube, chief ratings officer for ESG Ratings at CareEdge, said company disclosures under the Business Responsibility and Sustainability Reporting framework show firms have overwhelmingly focused on internal process changes rather than buying credits. "Ideally what we have seen from the good level of disclosures around the companies, what they have till now relied on is abatement instead of offset till now," Dube explained. He noted that the upcoming CCTS would give companies a structured way to manage residual emissions while they continue reducing emissions through operational changes.
India laid the foundation for its compliance carbon market through amendments to the Energy Conservation Act in 2023. According to Mint's reporting, the framework includes both a mandatory compliance market and voluntary mechanisms. Shuchi Malhotra, lead advisor for carbon markets at the Environmental Defense Fund, said the compliance market covers eight sectors including cement, aluminium, chlor-alkali, pulp and paper, petrochemicals, petroleum refineries, fertilizers, and steel, which together account for more than 700 entities and roughly 20% of India's greenhouse gas emissions. Companies that outperform their emissions targets receive carbon credit certificates, while those that fall short must purchase credits to make up the difference.
Agriculture could become a major source of carbon credits given both the sector's emissions footprint and potential for verified emissions reductions. Suhas Joshi, director and carbon initiative lead at Bayer South Asia for the Good Rice Alliance, said agriculture contributes roughly a quarter of global greenhouse gas emissions but also offers significant mitigation opportunities. "And therefore, it is important that we focus on agriculture not just as a problem, but also as a solution," he said. Joshi emphasized that verifying emissions reductions across millions of fragmented smallholder farms requires technology-driven monitoring, with remote sensing, artificial intelligence and blockchain becoming critical tools for measuring and validating field-level emissions reductions.
Even as the regulatory framework takes shape, panellists identified several building blocks that remain unfinished before India's carbon market can scale. Dube said developing a transparent pricing mechanism remains one of the market's biggest challenges, noting that "the issue that we currently face is the price discovery." He added that domestic ESG ratings frameworks could help build buyer confidence and channel capital into India's emerging carbon market. Malhotra emphasized that credits should complement, not replace, direct emissions reductions, with governance bodies such as the Integrity Council for Voluntary Carbon Markets establishing core principles covering additionality, permanence, accurate measurement and the avoidance of double-counting.
