India will begin formal trading in its domestic carbon market within the next four months, Union Power Minister Manohar Lal said, marking a major step toward building a structured carbon pricing system to curb emissions.
The trading framework will allow companies with surplus carbon credits to sell them to entities that fall short of their emission reduction targets, creating a market-based mechanism to support the country’s climate goals.
Speaking on the sidelines of the Bharat Electricity Summit 2026, the minister said companies will need to register under the scheme before participating in the trading of carbon certificates.
The proposed carbon market will function as an incentive-driven system, enabling industries to balance emissions while encouraging investments in cleaner technologies and energy efficiency.
India has committed to achieving net zero emissions by 2070, and the carbon trading framework is expected to become a key policy instrument supporting that long-term climate target.
The government has already set greenhouse gas emission intensity reduction targets for around 490 obligated entities starting in 2026, requiring them to cut their carbon footprint as part of the compliance framework.
Officials said the initiative builds on earlier programmes such as the Perform, Achieve and Trade (PAT) scheme, which has covered more than 1,300 industries and helped reduce carbon dioxide emissions by about 110 million tonnes while improving energy efficiency across sectors.
The carbon market will also complement broader policy measures including smart metering, green open access and time-of-day tariffs, as India accelerates the shift toward a lower-emission energy system.
The minister said the carbon trading framework could evolve into a long-term national asset by supporting innovation, entrepreneurship and investment in clean technologies.
