UK Includes India's Carbon Credit Trading Scheme in CBAM List

The United Kingdom has recognised India's Carbon Credit Trading Scheme (CCTS) under its Carbon Border Adjustment Mechanism (CBAM), marking a significant step in India-UK climate and trade cooperation. HM Treasury confirmed the inclusion in a communication to the Bureau of Energy Efficiency, Ministry of Power, after the CCTS met the qualifying criteria set under UK law in 2026.

What is India's Carbon Credit Trading Scheme (CCTS)?

The CCTS is India's domestic mechanism to put a price on carbon emissions, encouraging industries to cut their carbon footprint through a market-based trading system. Companies that reduce emissions below set targets earn tradeable carbon credits, while those exceeding limits can buy credits to stay compliant. It's a key tool in India's broader push toward its climate commitments and a greener industrial base.

India's CCT Scheme Included in the UK's Published Indicative List of Overseas Carbon Pricing Schemes

The UK assessed the CCTS against Part 3, Regulation 6 of its CBAM regulations and found it met the qualifying standard for overseas carbon pricing mechanisms. This recognition came after sustained technical talks between India's Commerce Ministry and its UK counterpart on how the CCTS is designed and implemented. Officials say the decision reflects CBAM's underlying principle: goods shouldn't be taxed twice for carbon emissions already priced in their home country.

Benefits for Indian Exporters and UK Importers

1. With this recognition, UK importers bringing in eligible Indian goods under CBAM can now claim carbon price relief, matching the carbon cost those goods already bore under the CCTS provided they meet the UK's evidence and verification norms.
2. In practical terms, this lowers the CBAM burden on Indian exports, making Indian goods more cost-competitive in the UK market. 
3. Going forward, both countries plan to keep working together on carbon pricing issues through the UK-India Energy Memorandum of Understanding and the Partnership for Market Implementation, deepening ties on climate and trade policy.