The Ministry of Environment, Forest and Climate Change (MoEFCC) expanded India's Carbon Credit Trading Scheme (CCTS) between January 16-22, 2026, by adding four new industrial sectors: petroleum refining, petrochemicals, textiles, and secondary aluminium. The expansion notification brings 208 new entities into the compliance framework, raising the total number of regulated entities to approximately 490.
The Carbon Credit Trading Scheme was originally established under the Energy Conservation (Amendment) Act, 2022, which created the statutory basis for a domestic carbon market in India. The scheme operates under the Indian Carbon Market (ICM) framework, where entities are assigned greenhouse gas (GHG) intensity targets and must either achieve them or purchase carbon credits from entities that exceed their targets.
Under the expanded scheme, the 208 new industrial entities across the four sectors will be assigned GHG intensity reduction targets ranging from 3% to 7% by 2026-27, depending on their sector and baseline emissions profile. These are intensity-based targets (emissions per unit of output), not absolute reduction caps, making them compatible with economic growth.
The ICM compliance framework is scheduled to launch formally in mid-2026, at which point entities that fail to meet their targets will be required to purchase carbon credits, while those that overperform will be able to sell credits — creating financial incentives for emissions reduction investment.
The expansion of CCTS reflects India's strategy of gradually scaling up its domestic carbon market before integrating with international mechanisms under Article 6 of the Paris Agreement. India's domestic market is designed to be distinct from voluntary carbon markets, with mandatory participation by designated energy-intensive industries.
For petroleum refining and petrochemicals — sectors central to India's energy security and industrial economy — inclusion in CCTS creates compliance pressure to improve energy efficiency, reduce flaring, adopt cleaner feedstocks, and invest in process optimization. For textiles, one of India's largest employers and export sectors, the carbon framework creates incentives aligned with global sustainability requirements from EU and US buyers under emerging carbon border adjustment mechanisms.