India's CCTS Offset Mechanism: How Non-Obligated Companies Can Earn Carbon Credits

Most coverage of India's Carbon Credit Trading Scheme (CCTS) focuses on the 490 obligated industrial units in aluminium, cement, chlor-alkali, pulp and paper, petroleum refining, petrochemicals and textiles. But the scheme has a second half that far more Indian companies can actually use: the offset mechanism. It allows organisations outside the compliance perimeter to register emission reduction or removal projects and earn Carbon Credit Certificates (CCCs) inside India's own regulated market.

If your company runs a biogas plant, an afforestation programme, a waste handling upgrade or a fleet efficiency project, this is the route that turns that activity into a government-issued, tradable credit. Here is how it works, and what to weigh up before committing budget.

What the offset mechanism is, and who it is for

The legal chain is short. The Energy Conservation Act, 2001 was amended in 2022 to allow a domestic carbon market. The CCTS was notified in June 2023 with a compliance mechanism, then amended in December 2023 to add the offset mechanism. In March 2025 the Bureau of Energy Efficiency (BEE), which administers the scheme, published Version 1 of the Detailed Procedure for the Offset Mechanism.

The mechanism is open to non-obligated entities — any organisation that does not carry a CCTS emissions intensity target. That covers MSMEs, project developers, NGOs, farmer producer organisations, municipal bodies, and corporates in sectors such as IT services, FMCG and financial services that have no target of their own.

One clarification worth making early, because it is widely misunderstood: as of April 2026, the World Bank's Partnership for Market Implementation noted that the use of offset credits within the CCTS compliance mechanism is not yet permitted. Obligated entities still meet targets by outperforming them or buying compliance CCCs. Offset-mechanism credits are, for now, a voluntary-demand instrument used for net-zero claims, CSR and disclosure — not a compliance shortcut. For the wider picture, see our plain-language guide to the CCTS.

Which projects qualify

Phase 1 of the offset mechanism covers six sectors:

• Energy

• Industry

• Waste handling and disposal

• Agriculture

• Forestry

• Transport

Phase 2 sectors — construction, fugitive emissions, solvent use, and carbon capture, utilisation and storage — are to be addressed later.

Three eligibility rules catch out most first-time applicants:

• Start date. The project must have a start date no earlier than 1 January 2025. Activities that began before that are not eligible.

• Exclusivity. The same activity cannot be credited simultaneously under another programme, with a carve-out for the Green Credit Programme.

• Approved methodology. Every project must follow a BEE-approved methodology. These have been adapted from the CDM, Article 6.4 and other credible global voluntary standards, with development principles drawn from ISO 14064 Part 2 (2019).

Projects must also work through the scheme's SDG standard: identify, evaluate, mitigate and monitor environmental and social risks, and document contributions against the 17 UN Sustainable Development Goals.

The registration and issuance route, step by step

1. Register an account on the Indian Carbon Market registry. Both obligated and non-obligated entities are required to register.

2. Prepare a project design document against an approved methodology, covering the project boundary, baseline scenario, estimated emission reductions and monitoring plan.

3. Appoint an Accredited Carbon Verification Agency (ACVA) for validation — completeness check, desk review, on-site assessment, stakeholder consultation, and closure of corrective and forward action requests.

4. Register the project once validation concludes.

5. Monitor against the approved plan and have emission reductions or removals verified periodically by an ACVA.

6. Receive issuance. The ACVA recommends issuance, BEE reviews the verification report, and CCCs are issued on the recommendation of the National Steering Committee for the Indian Carbon Market.

Two timing rules have real commercial consequences. Issuance requests must be submitted in chronological order and within two years after the end of the crediting period. Crediting periods may be fixed or renewable, and renewal requires fresh validation by an ACVA. Once issued, a certificate sits in one of three states — active, retired or cancelled — with retirement being permanent removal from circulation. Retirement is what a corporate buyer ultimately needs on record.

What to watch over the next two quarters

BEE's PRAKRITI convening on 21–22 March 2026 marked the shift from framework to operation. The 490 obligated entities are entering their first trading cycle, with certificates traded on India's power exchanges under Central Electricity Regulatory Commission oversight and Grid Controller of India operating the registry. Their first performance filings were due within four months of the financial year end, on 31 July. Where an entity falls short and does not surrender enough certificates, the Central Pollution Control Board can impose environmental compensation equal to twice the average price at which CCCs traded during that compliance year's cycle — the detail we covered in our note on the 31 July 2026 CCTS compliance deadline.

For non-obligated companies the practical question is whether to develop a project or buy credits. Registration is not quick: methodology selection, project design document, validation and a first verification cycle rarely complete inside twelve months, and nature-based projects need several growing seasons before a first issuance — a point we explore in our guide to afforestation carbon credits in India. Companies that want retired credits on the books for FY2027 disclosures usually need both tracks: procurement now, and a pipeline project in development alongside it.

Csquare works on both sides of this. We source and retire verified carbon credits for near-term corporate targets, and we design and deliver Miyawaki afforestation projects that can be built for future crediting. If you are assessing an offset project under the CCTS or need credits against a FY2027 commitment, talk to our team.