Carbon Credits and Cleantech: India’s Secret Sauce for Global Green Leadership

India’s Carbon Credit Trading Scheme (CCTS) is poised to become the financial powerhouse for the country’s cleantech ambitions. By channeling revenues from carbon credits into innovation and green manufacturing, India could lead the global transition to a sustainable, low-carbon economy while enhancing energy security and export competitiveness.

India’s newly launched Carbon Credit Trading Scheme (CCTS) has ushered in a transformative opportunity to finance and accelerate the nation’s clean technology (cleantech) future. The scheme, initiated under the Energy Conservation (Amendment) Act of 2022 and operational since early 2025, enables trading of verified carbon credits generated by emission reductions across industrial and energy sectors. These revenues can be strategically reinvested to support India’s ambitious climate and manufacturing goals.

CCTS is more than just a compliance tool to limit greenhouse gas emissions; it is a potential engine for India’s green industrial revolution. By monetizing efforts in renewable energy, energy efficiency, hydrogen production, and reforestation, the scheme generates substantial revenue streams. This funding can create a robust domestic cleantech manufacturing ecosystem, reducing reliance on imports while positioning India as a global hub for green products.

Key highlights include:

The CCTS covers nine energy-intensive industries such as aluminium, cement, petrochemicals, and textiles, compelling them to either meet emission intensity targets or purchase carbon credits.

Revenues from carbon credit trading can support supplier upgrades, innovation, and cost reductions, fostering competitiveness in burgeoning sectors like solar, battery storage, and green hydrogen.

India's carbon market is gaining international credibility, with recognition from the European Union’s Carbon Border Adjustment Mechanism (CBAM), which allows credits from India to offset border taxes on exports, enhancing export prospects.

The government has approved multiple methodologies for credit generation—including renewable energy, landfill methane recovery, and afforestation—aligning environmental benefits with economic incentives.

While bureaucratic delays in emission target notifications have posed challenges, the overall regulatory framework is maturing rapidly to support a thriving carbon economy.

By thoughtfully harnessing carbon credit revenues, India could transform fiscal streams from a potential “carbon pricing black hole” into a dynamic, future-ready cleantech fund. This translates into cost-effective climate action, scalable clean manufacturing, enhanced energy security, and a sustainable pathway toward net-zero emissions by 2070. The stakes are high, and the opportunity is ripe for India to lead global green manufacturing innovation.

Sources: Hindustan Times, Dalberg Advisors, Asia Society Policy Institute, Bureau of Energy Efficiency, Indian Ministry of Environment and Forests, European Union CBAM

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