India Carbon Credit Trading Scheme (CCTS) 2026: What Every Industrial Company Must Know

India's Carbon Credit Trading Scheme (CCTS) is set to become fully operational in 2026, creating the country's first compliance carbon market. Under the Energy Conservation (Amendment) Act 2022 and the Carbon Credit Trading Scheme notification of June 2023, the Bureau of Energy Efficiency (BEE) has been empowered to set Greenhouse Gas Emission Intensity (GEI) targets for designated industrial entities. This marks a fundamental shift in how Indian industries will manage their carbon footprint — from voluntary commitments to mandatory, tradeable obligations.

Which Industries Are Covered Under CCTS?

In April 2025, the government identified over 130 large industrial entities for the initial phase, spanning sectors including cement (UltraTech, Ambuja, ACC), steel (JSW Steel, Tata Steel, SAIL), aluminium (Hindalco), pulp and paper, chlor-alkali, fertilisers, and thermal power. These sectors were selected based on their energy intensity and emission profiles. Future phases are expected to expand coverage to petrochemicals, refineries, railways, ports, and large commercial buildings.

How Does the CCTS Compliance Mechanism Work?

Under CCTS, designated entities receive GEI targets — maximum allowable emissions per unit of production or output. The mechanism works through a perform-achieve-trade model. Companies that reduce emissions below their assigned targets earn Carbon Credit Certificates (CCCs). Companies that exceed their targets must either reduce emissions or purchase CCCs from the market to meet compliance. CCCs will be tradeable on designated exchanges, creating a market price signal for carbon. The Grid Controller of India is designated as the national registry, and the Indian Carbon Market (ICM) will facilitate trading.

CCTS vs India's Existing PAT Scheme

CCTS is designed to eventually subsume and expand upon the existing Perform, Achieve and Trade (PAT) scheme under BEE. While PAT focused primarily on energy efficiency and covered around 1,000 designated consumers, CCTS directly targets GHG emissions and is expected to cover a broader set of entities. Companies currently under PAT should treat CCTS preparation as an evolution of their existing compliance programme, leveraging existing energy audit data and MRV (Monitoring, Reporting and Verification) systems.

The EU CBAM Connection

Indian exporters of steel, cement, aluminium, fertilisers, and hydrogen to the EU will also face the Carbon Border Adjustment Mechanism (CBAM) from 2026. CBAM imposes tariffs based on the embedded carbon content of imported goods. Companies participating in India's CCTS may be able to demonstrate that carbon costs have already been incurred domestically, potentially reducing CBAM liabilities. This makes CCTS participation not just a domestic compliance issue but a critical factor in maintaining export competitiveness.

How to Prepare for CCTS Compliance

Preparation should begin now. Conduct a comprehensive GHG inventory across all facilities. Establish robust MRV systems for emissions tracking. Evaluate energy efficiency and decarbonisation opportunities to reduce your baseline emissions. Develop a carbon credit procurement strategy for potential shortfalls. Assess the financial impact of carbon pricing on your operations. Build internal capacity in carbon accounting and climate risk management.

How C² Supports Your CCTS Readiness

C² helps industrial companies navigate the transition to compliance carbon markets. Our services include GHG accounting and emissions baseline assessment, MRV system design and implementation support, carbon credit sourcing for compliance shortfalls, integration of CCTS planning with BRSR reporting and ESG strategy, and CBAM preparation for EU exporters. Contact us at info@csquare.co.in or +91 93201 98085 to discuss your CCTS readiness strategy.