India brings four more high-emission sectors under carbon market

New Delhi: India has expanded its national carbon market by bringing four additional carbon-intensive sectors under regulation. Petroleum Refineries, Petrochemicals, Textiles, and Secondary Aluminium will now be covered under the Carbon Credit Trading Scheme (CCTS).

The move was announced through a notification issued on Thursday, which sets greenhouse gas emission intensity (GEI) reduction targets for these sectors. As a result, 208 companies operating in these industries will be required to meet specific emission reduction goals.

With this expansion, the compliance mechanism of the Indian Carbon Market (ICM) now covers 490 obligated entities across the country’s most polluting industries.

Earlier, in October 2025, the government had notified GEI targets for Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors, covering 282 companies.

The CCTS, introduced in 2023, provides the framework for carbon trading in India. Its main aim is to reduce greenhouse gas emissions by assigning a cost to pollution.

The CCTS operates through two mechanisms: the Compliance Mechanism and the Offset Mechanism. Under the compliance mechanism, emission-intensive industries must meet assigned GEI targets. Companies that reduce emissions beyond their targets earn carbon credit certificates, which can be traded with companies that fall short.

Obligated Entities that outperform their targets are eligible to receive Carbon Credit Certificates which they can trade with obligated entities which are unable to meet their targets.

The government said the expansion is the result of extensive consultations with industry, technical assessments, and coordination among institutions.

As the carbon market grows and matures, it is expected to play an important role in supporting India’s climate commitments while allowing continued industrial growth and progress toward the country’s long-term net-zero goals.