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India Set to Launch Carbon Market Trading Within Four Months

India is preparing to roll out formal trading in its domestic carbon market within the next four months, marking a significant step in its strategy to reduce emissions and strengthen climate action through market-based mechanisms.

Announcing the development, Power Minister Manohar Lal Khattar said the initiative will establish an economic framework that incentivises industries to cut their carbon footprint. The announcement was made on the sidelines of the Bharat Electricity Summit 2026.

According to the minister, stakeholders must register under the scheme before participating in the trading of carbon certificates. This system will allow entities that generate excess carbon credits to sell them, while those unable to meet emission targets can purchase credits to remain compliant.

The carbon market is designed to function as a balancing mechanism, promoting efficiency by rewarding low emitters and encouraging others to adopt cleaner practices. Describing it as an incentive-driven model, the minister noted that such a framework supports the broader goal of achieving carbon neutrality.

India has been intensifying efforts to curb emissions through a mix of regulatory measures and market-based solutions, particularly as global temperatures continue to rise. He highlighted that average global temperatures have already increased by around 1.4°C compared to pre-industrial levels, with recent years ranking among the hottest on record.

Under its commitments to the Paris Agreement, India aims to achieve net-zero emissions by 2070. The country is expanding its renewable energy capacity while also strengthening domestic policies to support long-term sustainability goals.

The minister emphasised that climate action is both a national and individual responsibility, requiring not only policy interventions but also technological innovation and behavioural changes.

As part of the compliance framework, the government has identified 490 obligated entities that will be subject to greenhouse gas emission intensity targets starting in 2026. These entities will need to actively reduce emissions, with the carbon market offering flexibility and financial incentives to help meet their targets.