India to start carbon market trading within 4-months

India is set to launch formal trading in its domestic carbon market within the next four months, Union Power Minister Manohar Lal Khattar announced, marking a significant step in the country’s climate action strategy. The announcement was made on the sidelines of the Bharat Electricity Summit 2026 held in New Delhi.

The upcoming carbon market will enable industries to trade carbon credits, creating a financial mechanism to control emissions. Under this system, entities with surplus carbon certificates can sell them, while those unable to meet emission targets can purchase credits to comply.

Khattar described the model as an incentive-based approach to achieving carbon neutrality, encouraging industries to adopt cleaner practices.

Participation in the market will require stakeholders to register under the scheme. As part of the compliance framework, the government has already identified 490 obligated entities that will need to meet greenhouse gas emission intensity targets beginning in 2026. The market is expected to provide flexibility while ensuring accountability in emission reductions.

Highlighting the urgency of climate action, the Union Minister said that global temperatures have already risen by around 1.4°C compared to pre-industrial levels, with recent years among the warmest on record. India, a signatory to the Paris Agreement, has committed to achieving net-zero emissions by 2070 and is rapidly expanding its renewable energy capacity.

Khattar also mentioned about the success of existing initiatives like the Perform Achieve and Trade Scheme, which has covered over 1,300 industries and helped reduce approximately 110 million tonnes of carbon dioxide emissions. Complementary measures such as smart metering, green open access, and time-of-day tariffs are further strengthening energy efficiency efforts.

The minister held that the carbon market will evolve into a long-term national asset, fostering innovation and supporting India’s transition to a low-carbon economy while reinforcing its position in global climate leadership forums like COP28 and the G20.