The question India's industrial sector has been deferring for years is about to arrive on a fixed schedule. Active trading under the Carbon Credit Trading Scheme is set to begin in the fourth quarter of 2026, and the corporations that have spent the last decade treating decarbonisation as an internal process exercise — tightening furnaces, switching lighting systems, optimising logistics — will need to decide how carbon credits fit into a strategy that now has a regulatory deadline attached to it.
The Mint Sustainability Impact Summit 2026 assembled the people closest to this transition. What emerged was not a market in confident readiness but a regulatory architecture falling into place while harder questions of price and credibility remain open. Nikunj Dube, chief ratings officer for ESG Ratings at CareEdge, noted that company disclosures under the Business Responsibility and Sustainability Reporting framework show firms have focused overwhelmingly on internal process changes rather than buying credits. The distinction he drew was precise: companies have relied on abatement rather than offset. That distinction — between cutting your own emissions and paying someone else's — sits at the centre of every serious argument about whether carbon markets accelerate decarbonisation or just paper over it.
The Greenwashing Trap and the Credibility Threshold
Corporate reluctance to purchase credits has not been irrational. For much of the last decade, buying a carbon offset in India meant navigating a voluntary market with uneven verification standards and additionality claims — the assertion that the emission reduction would not have happened anyway — that were routinely contested. Dube acknowledged that concerns about greenwashing accusations have kept procurement teams away from the offset market even when the economics favoured it.
What the CCTS is supposed to provide is a compliance floor that changes that calculation. A company operating under a sectoral emissions intensity target cannot simply choose not to engage with the market; the credit becomes a mandatory instrument for managing the gap between what internal abatement achieves and what the regulatory cap requires. Shuchi Malhotra, lead advisor for carbon markets at the Environmental Defense Fund, framed this as a responsibility that exists alongside, not instead of, direct emissions work: companies have an obligation to manage ongoing emissions even as longer-term decarbonisation proceeds. This formulation pushes back against the binary choice — real action versus offsets — that has distorted public debate about carbon markets for years.
But the architecture only works if the price it produces is credible. A carbon price set too low, or one that drifts downward because verification is weak and supply is abundant with low-quality credits, does not change investment decisions. A plant manager choosing between installing a new low-carbon process and buying cheap credits will pick the credits if the economics favour it. The analysts working closest to this design problem have consistently flagged that a floor price, set transparently and adjusted on a defined schedule, is the most important structural feature the market needs to get right at launch.
What CBAM Changes About the Calculus
The urgency is not purely domestic. The European Union's Carbon Border Adjustment Mechanism has been phasing in tariff obligations on imports of steel, aluminium, and cement, and the trajectory points toward a world where Indian exporters in these sectors face a carbon cost whether or not India has a functioning domestic price. The logic of CBAM is that European producers paying the EU's internal carbon price should not compete against imports produced without equivalent carbon accountability. If India's domestic market produces a recognised, verifiable carbon price, that price can in principle be deducted from the CBAM liability. If it does not, European buyers simply pay the EU border adjustment and pass some portion of it back down the supply chain.
This is the structural incentive that makes India's carbon market design an industrial policy question, not merely a climate one. The steel mills and cement plants of Odisha and Gujarat that sell into European markets have a direct financial interest in India building a carbon price that Brussels considers credible. A market that produces a nominal price but whose verification framework does not meet international MRV — measurement, reporting, and verification — standards offers no CBAM relief. The reputational cost would compound the financial one: buyers in Germany and France making procurement decisions increasingly embed carbon accountability into supplier due diligence, and an Indian industrial sector associated with weak carbon accounting loses ground that is difficult to recover.
The Additionality Problem India Has Inherited
India is not starting from scratch, which is both an advantage and a liability. The Perform, Achieve and Trade scheme under the Bureau of Energy Efficiency has run for over a decade, creating a baseline of energy intensity benchmarking and some institutional familiarity with trading mechanisms in energy-intensive sectors. That institutional memory is genuinely useful. But the voluntary carbon market experience, particularly with credits generated under the Clean Development Mechanism before its effective wind-down, left a legacy of scepticism about Indian offset quality — projects that claimed additionality they could not sustain, verification audits that were superficial, and a secondary market where credit prices reflected the lack of confidence.
The risk is that the CCTS launches into a market where the memory of CDM-era problems shapes buyer behaviour, particularly among international buyers who would otherwise be the natural purchasers of Indian credits under Article 6.2 bilateral arrangements. India has actively defended its right to authorise internationally transferred mitigation outcomes — credits that can be exported under bilateral agreements with countries including Japan and Switzerland — and that revenue stream is a meaningful part of the financial case for building the market robustly. But the international buyer will not pay a credibility premium for Indian credits unless the domestic verification framework earns it.
The coal dependence that Dube flagged at the summit is relevant here. Several industrial sectors will continue burning coal for years because viable alternative fuels are not yet commercially deployable at scale. That is a fact, not an excuse, and a well-designed carbon market should accommodate it — creating a price signal that accelerates the investment timeline for switching without demanding an overnight transition that no capital allocation cycle can support. The phased compliance approach that industry associations have called for is a legitimate ask, provided the phase schedule is published and binding rather than open-ended.
The Forest Credit Opportunity
The other side of this ledger — the supply side — is where India holds a genuine comparative advantage that the compliance market design should not squander. India's forest and land-use sector has potential to generate carbon credits that, if underpinned by credible MRV, would be among the more cost-effective in the global market. The combination of scale, biodiversity co-benefits, and a domestic verification ecosystem still being built creates a first-mover opportunity: establish the standard early, attract international technical collaboration to strengthen it, and position Indian forest credits as a premium product in Article 6 bilateral deals.
That requires the government to resolve a tension it has not yet fully addressed. Forest carbon is politically complex — rights over forest land, community entitlements, state versus central jurisdiction — and the MRV harmonisation needed to meet international benchmarks requires sustained interministerial coordination that India's climate bureaucracy has not always delivered at speed. The window for capturing this advantage is not indefinite; other large forest economies are moving to establish their own credit standards and bilateral agreements, and the first credible large-scale forest credit seller will define what quality looks like for the next decade.
What India is building with the CCTS is a mechanism whose design quality will compound over time — for better or worse. A market that launches with a credible price, robust verification, and a published phase schedule for tightening sectoral caps will attract green finance, build CBAM resilience, and position Indian credits for export. A market that launches with weak governance and a low price will produce the one outcome that nobody at the Sustainability Impact Summit advocated for: large emitters buying cheap credits instead of investing in technology transition, while European buyers quietly route their procurement away from Indian suppliers who cannot demonstrate genuine carbon accountability. The Q4 2026 launch date is fixed. What is still negotiable is whether the architecture behind it earns the credibility that date will demand.
