India's New Carbon Market — What You Need to Know
The Energy Conservation (Amendment) Act 2022 created the legal framework for India's domestic carbon market. Under this framework, the government notified the Carbon Credit Trading Scheme (CCTS) in June 2023. The Bureau of Energy Efficiency (BEE) under the Ministry of Power is the designated administrator of the Indian Carbon Market (ICM).
The scheme operates on two tracks. The first is a compliance track for obligated entities — large industrial units in energy-intensive sectors (aluminium, cement, chlor-alkali, fertilisers, iron and steel, petrochemicals, pulp and paper, textiles) that must meet energy consumption norms. Those who reduce consumption below their assigned targets earn Indian Carbon Credits (ICCs). Those who cannot meet targets must purchase credits from others.
The second is an offset credit track (voluntary), where non-obligated entities — businesses in any sector — can undertake emission-reduction or carbon-sequestration projects and earn offset credits that can be sold to obligated entities or on voluntary carbon markets.
Carbon credits are traded through BEE-recognised exchanges. The Power Exchange of India (PXIL) and Indian Energy Exchange (IEX) are the designated trading platforms. Each credit represents one tonne of CO₂ equivalent reduced or sequestered.
ESG Compliance for Indian Businesses
ESG — Environmental, Social, and Governance — has moved from a voluntary framework to a regulatory requirement for many Indian businesses. SEBI introduced the Business Responsibility and Sustainability Report (BRSR) as a replacement for the older Business Responsibility Report (BRR), mandating it for the top 1,000 listed companies (by market capitalisation) from Financial Year 2022-23.
From FY 2023-24, SEBI further introduced BRSR Core — a subset of key performance indicators for which the top 150 listed companies must obtain third-party assurance (i.e., independent verification of reported metrics). This makes ESG data for large listed companies as auditable as financial data.
For unlisted companies and SMEs, BRSR is voluntary — but investors, banks, supply chain partners, and export customers increasingly require ESG disclosures as a condition of doing business. Proactive ESG reporting builds credibility and opens access to green finance (green bonds, sustainability-linked loans).
Our Three Service Areas
We advise on project eligibility under CCTS, documentation requirements for BEE registration, structuring carbon credit purchase and sale agreements, and navigating the Indian Carbon Market. For businesses in Pondicherry's industrial sector — manufacturing, chemical processing, textiles — we assess whether you qualify as an obligated entity and what your compliance obligations are.
We help listed and unlisted companies prepare BRSR reports, identify reporting gaps, draft BRSR disclosures aligned with SEBI's format, and advise on the NGRBC (National Guidelines for Responsible Business Conduct) principles that underpin the BRSR framework. We also help companies align with GRI (Global Reporting Initiative) and UN SDG frameworks for international reporting.
India's environmental compliance framework — Environment Protection Act, Plastic Waste Management Rules, Extended Producer Responsibility (EPR), Coastal Regulation Zone (CRZ) rules — creates specific obligations for businesses operating in and around Pondicherry. We advise on EPR registration, PPCC (Pondicherry Pollution Control Committee) consent applications, CRZ compliance for coastal properties, and single-use plastic ban compliance.
Who Needs These Services
- Manufacturing companies in energy-intensive sectors that may be obligated entities under CCTS — aluminium, cement, steel, fertiliser, textile, chlor-alkali, pulp and paper units.
- Companies with export customers who require carbon footprint disclosures or ESG questionnaires as part of supply chain due diligence.
- Listed companies in the top 1,000 by market cap who must file BRSR, and top 150 requiring BRSR Core assurance.
- Companies raising green finance — sustainability-linked loans, green bonds, or ESG-screened investment — where lenders require ESG data.
- Businesses committed to carbon neutrality targets who want to understand their options under the Indian Carbon Market — both for purchasing credits to offset residual emissions and for generating credits through operational improvements.
- Coastal businesses in Pondicherry requiring CRZ clearances and PPCC consents for construction or expansion near the coast.
- E-commerce and product companies with plastic packaging obligations under Extended Producer Responsibility rules.
Frequently Asked Questions
The Carbon Credit Trading Scheme (CCTS) was notified by the Ministry of Power in June 2023 under the Energy Conservation (Amendment) Act 2022. It establishes India's domestic carbon market — the Indian Carbon Market (ICM) — with BEE as the administrator. The scheme has two tracks: a compliance track for obligated entities in energy-intensive industries, and an offset credit track for voluntary participants. Indian Carbon Credits (ICCs) represent one tonne of CO₂ equivalent and are traded on designated exchanges.
BRSR (Business Responsibility and Sustainability Report) is mandatory for the top 1,000 listed companies by market capitalisation from FY 2022-23 onwards. For the top 150 listed companies, BRSR Core with third-party assurance is mandatory from FY 2023-24. For unlisted companies, ESG reporting is currently voluntary — but is increasingly demanded by investors, banks offering green finance products, and large enterprise customers as part of supply chain ESG screening.
BRSR (Business Responsibility and Sustainability Report) replaced the older Business Responsibility Report (BRR) from FY 2021-22. Unlike BRR, which was largely qualitative, BRSR requires quantitative disclosures on environmental metrics (energy consumption, water use, GHG emissions, waste generated), social metrics (employee welfare, community development spend), and governance metrics (board composition, ethics). The BRSR Core framework further requires key environmental and social KPIs to be independently verified for the top 150 listed companies.
Yes. The offset credit track of the CCTS is open to non-obligated entities including SMEs. If your business undertakes projects that reduce greenhouse gas emissions — such as installing renewable energy, improving energy efficiency, adopting sustainable waste management practices, or undertaking afforestation — you may be eligible to register as a voluntary participant and earn offset credits. These credits can then be sold to obligated entities who need to meet their compliance targets, or traded on voluntary carbon markets. We can assess your project's eligibility and advise on the registration process with BEE.
The Plastic Waste Management Rules 2016 (amended in 2022) require all producers, importers, and brand owners who introduce plastic packaging into India to register on the EPR portal managed by CPCB (Central Pollution Control Board). Annual targets for collection and recycling of plastic waste are assigned based on the quantity of plastic introduced. Non-compliance attracts penalties under the Environment Protection Act, including financial penalties and prosecution. For Pondicherry businesses, the PPCC (Pondicherry Pollution Control Committee) also oversees local compliance.
Ready to Address Your ESG & Carbon Obligations?
Whether you need to understand your CCTS obligations, prepare your BRSR report, or register for EPR — contact us for a practical consultation.