New Delhi: The government has expanded the scope of India’s carbon market by setting Greenhouse Gas Emission Intensity (GEI) targets for 208 industrial units with higher carbon emissions. The move brings more industries under the carbon compliance framework of the country.
The announcement, issued on January 13, places oil refineries, petrochemicals, textiles and secondary aluminum in the Carbon Credit Trading System (CCTS) compliance mechanism, which requires them to meet emission targets or buy carbon credits to offset excess emissions.
With this latest inclusion, a total of 490 mandated entities across the country’s highest emitting sectors are now included in the Indian carbon market compliance framework. Earlier in October 2025, the government announced GEI targets for 282 mandatory entities in the aluminum, cement, chlorine and alkali metal and pulp and paper sectors.
“The inclusion of oil, petrochemicals, textiles and secondary aluminum in India’s carbon market compliance mechanism marks a decisive shift from voluntary climate action to responsible economy-wide decarbonisation. This is not just the first few steps, it is about embedding carbon efficiency at the core of India’s industrial growth,” said Manish Dabkara, Chairman and Managing Director, Carbon Markets Association of India and President, EKI Bon Energy Services.
By extending GEI’s targets to the country’s 490 highest emitters, India signals that carbon performance will now determine competitiveness, access to capital and long-term resilience. The real test ahead will be execution, data integrity and market discipline, but this framework gives India the architecture to deliver, he added.
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The carbon credit trading system, announced in 2023, provides an overarching framework for the operation of the country’s carbon market. The scheme aims to reduce or avoid greenhouse gas emissions in various sectors of the Indian economy by assigning a price to emissions through a market-based carbon credit trading mechanism.
CCTS works in two ways – a matching mechanism and a compensation mechanism. Under the compliance mechanism, designated emissions-intensive industries, known as mandatory entities, are required to achieve prescribed GEI reduction targets. Entities that exceed their targets are awarded carbon credit certificates that can be sold to entities that fall short of their stated targets.
According to experts, the announcement of GEI’s targets for carbon-intensive industries is a timely and meaningful step to accelerate India’s journey to net zero. Compliance will force industries to adopt measurable and reliable pathways to reducing emissions.
“On-site renewables, high-performance HVAC (heating, ventilation and air-conditioning) systems and battery energy storage systems can directly reduce emissions and costs. For early adopters, the transition will not only be about compliance, but also about building long-term resilience and increasing their global competitiveness. The way forward will be efficiency upgrades, electrification and smarter energy management,” said Piyush Volyks, CEO of Energie Goyal.
Volks Energie provides integrated energy solutions specializing in solar energy (installation, design, maintenance) and HVAC systems.
Permanent engagement
According to the government, the expansion of sector coverage reflects sustained industry engagement, detailed technical assessments and coordinated efforts between institutions and stakeholders. As the compliance mechanism expands and matures, India’s carbon market is expected to play a key role in balancing industrial growth with India’s long-term climate commitments and net-zero emissions path.
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The offset mechanism in the CCTS is a voluntary system for non-mandated entities (those not directly regulated by the CCTS objectives) to obtain carbon credit certificates by developing projects that reduce, prevent or eliminate greenhouse gas (GHG) emissions. It stimulates projects in areas such as renewables, energy efficiency and afforestation, enables businesses to generate revenue from proven emissions reductions, contributes to India’s net-zero goals and supports sustainable development.
India has set a net zero target for 2070, which aims to offset greenhouse gas emissions and eliminate them so that overall emissions are neutral.
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