India to Roll Out Carbon Trading System by 2026

India is gearing up to introduce its own carbon trading market by mid-2026, a major step toward cleaner industrial practices and compliance with international sustainability standards. Power Minister Manohar Lal confirmed the launch timeline, highlighting the market’s role in helping industries manage their carbon footprint through a structured trading system.

A conservation worker places a young tree on a hillside in India, with New Delhi’s skyline in the distance. AI generated picture.

‘Very soon we are going to launch an independent carbon market of our country…Likely by mid of 2026,’ said the minister. ‘Under this programme, one who uses fossil fuel or emits carbon would have to buy carbon credits, and those who would use power from non-fossil sources would have carbon credits which they can sell in the market.’

The new carbon market comes at a pivotal time for Indian exporters, particularly in high-emission industries such as steel and cement. With the European Union’s Carbon Border Adjustment Mechanism (CBAM) imposing fees on carbon-intensive imports, Indian businesses must align with global emission norms to remain competitive.

‘Compliance with international carbon regulations is essential for businesses, especially those exporting to markets with stringent environmental policies,’ the minister stated. The carbon market will provide an avenue for industries to offset emissions, encouraging the adoption of greener energy sources while supporting sustainability goals.

The foundation for this initiative was laid in 2022 with the Energy Conservation (Amendment) Bill, which established the legal structure for carbon trading. The market will create financial incentives for businesses to cut emissions, allowing companies to trade credits based on their carbon output.

Industry stakeholders have been anticipating this move as a major step toward a low-carbon economy. By promoting cleaner industrial practices and integrating market-based emissions reductions, India is positioning itself as a key player in global sustainability efforts while securing its trade advantage in a carbon-conscious world.