The Government of India has notified Greenhouse Gas Emission Intensity (GEI) targets for additional carbon-intensive sectors under the Carbon Credit Trading Scheme (CCTS), significantly expanding the scope of the Indian Carbon Market (ICM).
The notification, issued on January 13, 2026, brings Petroleum Refineries, Petrochemicals, Textiles, and Secondary Aluminium sectors under the compliance mechanism of the ICM. With this move, 208 additional obligated entities will be required to meet specified emission intensity reduction targets.
The expansion increases the total number of obligated entities under the ICM’s compliance mechanism to 490, covering some of India’s most emission-intensive industries. Earlier, in October 2025, the government had notified GEI targets for Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors, encompassing 282 obligated entities.
The CCTS, notified in 2023, provides the overarching framework for the functioning of the Indian Carbon Market, aimed at reducing or avoiding greenhouse gas emissions by assigning a price to carbon through tradable carbon credit certificates.
Under the compliance mechanism, obligated entities that exceed their GEI reduction targets become eligible to earn Carbon Credit Certificates, which can be traded with entities that fail to meet their targets. The scheme also includes an offset mechanism to further support emission reduction initiatives.
For the renewable energy sector, the widening of carbon market coverage is expected to drive increased adoption of clean energy solutions, including captive and open-access solar projects, as industrial entities seek cost-effective pathways to meet emission targets. The move is also likely to strengthen demand for corporate renewable power purchase agreements and hybrid clean energy solutions.
The latest development reflects sustained policy engagement, technical assessments, and coordination among stakeholders. As sectoral coverage deepens, the Indian Carbon Market is poised to play a critical role in aligning industrial growth with India’s long-term climate commitments and net-zero ambitions.
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