India’s Carbon Credit Trading Scheme has been recognised by the United Kingdom under its Carbon Border Adjustment Mechanism. The decision allows UK importers of eligible Indian goods to claim relief for the effective carbon price already paid under India’s scheme, subject to UK evidence and verification requirements.
The UK’s CBAM will take effect on January 1, 2027. It will apply to imports of iron and steel, aluminium, cement, fertiliser and hydrogen. Businesses importing more than £50,000 worth of covered goods over the relevant period will be require to register under the mechanism.
The recognition could therefore be significant for Indian exporters in these sectors. The UK mechanism allows its carbon charge to be reduced when imported goods have already been subject to a qualifying carbon price overseas, preventing the same emissions from being priced twice.
India created the Carbon Credit Trading Scheme to price greenhouse gas emissions through Carbon Credit Certificates. The government has notified emission-intensity targets for seven energy-intensive sectors and put monitoring, reporting and verification systems in place as it develops the Indian carbon market.
The decision follows technical discussions between India’s Ministry of Commerce and its UK counterpart on the design and implementation of the scheme. Both countries plan to continue discussions on carbon-market design and on how India’s system will operate alongside the UK’s CBAM through existing energy and market partnerships.
