India's CCTS 2026: What Every Business Must Do Before the Carbon Compliance Deadline

India's Carbon Credit Trading Scheme (CCTS) is no longer a future concept. With binding emission intensity targets now officially notified for cement, aluminium, chlor-alkali, and paper sectors — and the 2025–26 compliance period already underway — the question is not whether your business will be affected. The question is whether you are ready.

What Is the CCTS and Why Does It Matter Now?

The Carbon Credit Trading Scheme is India's domestic carbon market, established under the Energy Conservation (Amendment) Act 2022. It creates two parallel mechanisms: an obligated market where regulated entities must meet emission intensity targets or purchase Carbon Credit Certificates (CCCs), and a voluntary market where non-obligated companies can generate and trade credits to improve their ESG position.

The Bureau of Energy Efficiency (BEE) is the designated administrator. The Central Electricity Regulatory Commission (CERC) operates the trading platform. And the compliance periods that matter most — 2025–26 and 2026–27 — are now officially in motion.

Which Sectors Are Obligated Under CCTS?

The first wave of CCTS-obligated sectors includes: Aluminium, Cement, Chlor-alkali, Iron and Steel, Petrochemicals, Petroleum Refining, Pulp and Paper, and Textiles. If your company operates in any of these sectors, you are already subject to emission intensity targets. Failing to meet them means you will need to purchase CCCs in the compliance market — at whatever the prevailing market price may be.

The CBAM Connection: Why Export-Oriented Businesses Face Double Pressure

For Indian exporters — particularly in steel, cement, aluminium, and fertilisers — 2026 brings a second layer of carbon compliance pressure. The European Union's Carbon Border Adjustment Mechanism (CBAM) will begin charging importers for the carbon content embedded in their goods. This means Indian manufacturers exporting to Europe must not only comply with domestic CCTS requirements but also measure, verify, and disclose their embedded emissions in a format acceptable to EU regulators.

Companies that have not yet established a carbon accounting framework will face both a compliance cost and a competitive disadvantage. Those that are already tracking Scope 1 and Scope 2 emissions, purchasing carbon credits strategically, and building verifiable ESG disclosures will be better positioned on both fronts.

What Non-Obligated Companies Should Do

Even if your sector is not currently obligated under CCTS, the voluntary carbon market is open to you — and increasingly relevant. Non-obligated companies can participate in two ways. First, by generating carbon credits through verified emission reduction projects (renewable energy, energy efficiency, afforestation) and selling those credits to obligated entities. Second, by voluntarily purchasing credits to improve their ESG ratings, meet supply chain sustainability requirements from large buyers, or prepare for future regulatory expansion.

The BRSR Core and ESG Disclosure Requirements

India's Business Responsibility and Sustainability Reporting (BRSR) framework is expanding. SEBI's BRSR Core — a set of Key Performance Indicators covering carbon emissions, energy consumption, water intensity, and supply chain practices — is now mandatory for the top 150 listed entities for FY 2023–24, expanding to the top 1,000 by FY 2026–27. For many Indian companies, this means the pressure to measure and disclose carbon data is arriving from two directions simultaneously: regulatory compliance through CCTS and BRSR, and commercial pressure from investors, buyers, and lenders who use ESG ratings as a procurement and credit decision criterion.

A Practical 5-Step Checklist for 2026 Carbon Readiness

Step 1 — Establish Your Baseline: Measure your current Scope 1 and Scope 2 emissions using a GHG Protocol-aligned methodology. Without a verified baseline, you cannot assess your position relative to CCTS intensity targets or calculate your CBAM exposure.

Step 2 — Assess Your CCTS Position: Determine whether your current emission intensity places you above or below your sector's mandated target. Companies above the target will need to purchase CCCs. Companies below the target may be eligible to generate and sell surplus credits.

Step 3 — Build a Carbon Credit Strategy: Whether you are a buyer or a potential seller of carbon credits, you need a strategy. For buyers, this means understanding the market price, timing your procurement, and ensuring the credits you purchase meet the quality standards required for CCTS compliance. For potential sellers, this means identifying qualifying emission reduction projects and understanding the verification process.

Step 4 — Align Your ESG Disclosures: Your CCTS compliance data, BRSR reporting, and any disclosures made to investors or international buyers should be consistent and verifiable. Inconsistencies between regulatory filings and commercial disclosures create reputational and legal risk.

Step 5 — Engage a Specialist: The intersection of carbon market mechanics, regulatory compliance, and ESG strategy is genuinely complex. Engaging an adviser who understands both the commercial carbon market and the Indian regulatory framework is the most reliable way to avoid errors that are costly to correct.

How Csquare Can Help

Csquare works with Indian businesses at every stage of the carbon market journey — from initial emissions measurement and CCTS position assessment, to carbon credit procurement, ESG reporting under BRSR, and CBAM readiness for exporters. If your organisation is trying to understand what the 2026 compliance landscape means for your specific situation, we are available for an initial consultation.

Visit csquarecarbon.com to learn more about our carbon credit trading and ESG reporting services, or reach out directly to discuss your organisation's position.