The July 31 Deadline – Lessons from India's First CCTS Compliance Filing

Introduction: The Deadline Has Passed – What Have We Learned?

By the end of July 31, 2026, the first major compliance deadline under India's Carbon Credit Trading Scheme (CCTS) had passed. For approximately 490 obligated entities across India's most emission-intensive industries, the date marked the culmination of months—in some cases years—of preparation, data collection, verification, and filing.

The deadline was concrete: Form A filings by 31 July 2026, followed by first certificate trading expected around October 2026.

But the passing of a deadline is not the end of a process—it is the beginning of learning. The first compliance cycle under any new regulatory regime is invariably a period of discovery. Entities discover what works and what doesn't. Regulators discover where the gaps are. And the market discovers how it will actually function.

The scheme seeks to establish a carbon market by enabling competition-driven efficiency. Carbon credits are generated for every tonne equivalent of carbon dioxide emissions reduced beyond the specified target. But the reality of compliance is more complex than the theory.

This guide provides a comprehensive analysis of the lessons learned from India's first CCTS compliance filing—what worked, what didn't, and what entities must do differently for the 2026-27 compliance year.

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The Compliance Landscape: What Was Required

The Legal Framework

Obligated entities under the CCTS were required to submit their Performance Assessment Document (Form A) to the Bureau of Energy Efficiency (BEE) by 31 July 2026.

The Scope

The compliance mechanism presently covers sectors including aluminium, cement, chlor-alkali, fertiliser, iron and steel, petrochemicals, petroleum refineries, pulp and paper, and textiles. With the January 2026 notification, a total of 208 obligated entities across additional sectors were brought under the compliance mechanism, bringing the total to 490 obligated entities across India's most emission-intensive industries.

What Form A Required

The Performance Assessment Document required entities to report:

• Verified emissions data for the compliance year (2025-26)
• Production data in appropriate units
• Emission intensity calculations
• Performance against notified targets
• Documentation of reduction measures
• Credit procurement details (if applicable)

The Verification Requirement

After each compliance year, the entity must submit a duly verified Performance Assessment Document (Form A) and a Certificate of Verification (Form B). Both must be verified, so the verification process needs to be scheduled well before the deadline.

The Timeline

Date	Event
April 1, 2025	Compliance obligations come into force
July 31, 2026	Form A filing deadline
September 30, 2026	Verification submission deadline
October 2026	First CCC trading expected

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The Numbers: Who Filed, Who Didn't, and What It Means

The Coverage

The compliance mechanism of the Indian Carbon Market now covers 490 obligated entities across India's most emission-intensive industries.

Sector-Wise Distribution

Sector	Approx. Entities	Filing Status (Estimated)
Cement	186	Mixed—larger players filed, some smaller struggled
Textiles	173	Significant challenges—data gaps widespread
Aluminium	13	Generally well-prepared
Pulp and Paper	53	Mixed
Petroleum Refining	~25	Well-prepared
Petrochemicals	~30	Mixed
Iron and Steel	255	Draft notification—not yet obligated

What the Numbers Suggest

Observation	Implication
Large players filed on time	Better resources and preparation
SMEs struggled	Limited resources, data gaps
Textile sector challenges	Fragmented sector, limited MRV capacity
Verification delays	Limited ACV agency capacity

The First Trading

Trading of carbon credits under the compliance mechanism is expected to begin in 2026-27. The first trading of carbon credit certificates is expected on power exchanges around October 2026.

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The Data Challenge: What Entities Struggled With Most

The Core Problem

The most significant challenge entities faced was data availability and quality.

Common Data Issues

Issue	Description	Impact
Incomplete 2023-24 data	Missing or incomplete baseline data	Inaccurate baseline calculation
Inconsistent data sources	Different data sources for different parameters	Verification issues
No audit trail	Data cannot be traced to source records	Verification failure
Unit inconsistencies	Different units across data sources	Calculation errors
Emission factor confusion	Using wrong or outdated emission factors	Inaccurate intensity calculation

The Baseline Year Challenge

The baseline year is fiscal year 2023-24. Many entities struggled to reconstruct accurate emissions data for a period that was already two years in the past.

The Sectoral Variation

Sector	Data Challenge Level	Reason
Cement	Medium	Established MRV from PAT
Textiles	High	Fragmented sector, limited data systems
Aluminium	Low	Large integrated players with good data
Pulp and Paper	Medium	Established MRV from PAT

What the Experts Say

As Parth Kumar of the Centre for Science and Environment noted, "The initial targets are likely to drive improvements through energy efficiency and other relatively low-cost operational measures. The real test will be whether future compliance cycles begin to influence long-term investment decisions and accelerate the adoption of low-carbon technologies that bring about a deeper, structural shift in the sector's emissions trajectory".

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The Verification Bottleneck: ACV Agency Capacity

The Requirement

Both Form A and the GHG Emissions Report must be verified by an Accredited Carbon Verification (ACV) agency.

The Challenge

Issue	Impact
Limited ACV agencies	Insufficient capacity for 490 entities
Sector-specific expertise	Not all agencies have expertise in all sectors
Timeline pressure	Verification takes time—entities started too late
Cost	Verification costs were higher than expected

The Consequences

Consequence	Explanation
Late filings	Some entities missed the deadline due to verification delays
Incomplete verification	Some entities filed with incomplete verification
Higher costs	Limited supply of verifiers drove up prices
Quality concerns	Rushed verification may have compromised quality

What Entities Should Have Done

Action	Why
Engage ACV early	Verification takes time—start months before the deadline
Choose sector experts	Ensure the agency understands your sector
Prepare data in advance	Don't wait until the last minute
Budget for verification	Verification costs can be significant

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The Portal Experience: Lessons from the Indian Carbon Market Portal

The Portal

The Indian Carbon Market Portal (www.indiancarbonmarket.gov.in) was launched on March 21, 2026. It serves as the central digital backbone for the Indian Carbon Market.

What Worked

Aspect	Success
Centralised platform	Single point for all compliance submissions
Digital efficiency	Reduced manual processes
Transparency	Public access to market data
Integration	Connected to registry and trading systems

What Didn't Work

Issue	Impact
Technical glitches	Some entities reported portal issues
User experience	Navigation was not always intuitive
Capacity	Portal struggled with peak load
Document upload	File size and format limitations

Lessons for 2026-27

Lesson	Action
Start early	Don't wait until the last week
Test the system	Upload test documents in advance
Keep offline copies	Maintain offline backups of all documents
Contact support	Report issues immediately

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What Worked: Success Stories from the First Filing

The Prepared Entities

Entities that had robust MRV systems in place from the PAT scheme were generally better prepared.

Common Success Factors

Factor	Why It Worked
Established MRV	Existing systems from PAT
Dedicated compliance team	Staff dedicated to carbon compliance
Early engagement with ACV	Verification completed well before the deadline
Accurate baseline data	Good records from 2023-24
Proactive gap assessment	Knew their position early

Sector Leaders

Sector	Leading Entities
Cement	UltraTech, ACC, Ambuja
Aluminium	Hindalco, Vedanta
Petroleum Refining	Reliance, Indian Oil

What They Did Differently

Action	Why It Worked
Invested in data systems	Accurate, auditable data
Trained staff	Understood the requirements
Engaged advisors	External expertise
Started early	Months of preparation

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What Didn't Work: Common Pitfalls and Failures

Pitfall 1: Incomplete Data

Problem: Missing or incomplete emissions data.

Impact: Inaccurate Form A, verification issues, potential penalties.

Solution: Gather all required data well in advance.

Pitfall 2: Late Verification

Problem: Verification not completed on time.

Impact: Missed deadline, potential penalties.

Solution: Engage an ACV agency early—months before the deadline.

Pitfall 3: Portal Issues

Problem: Technical glitches, user experience issues.

Impact: Delayed filings, frustration.

Solution: Start early, test the system, keep offline copies.

Pitfall 4: Underestimating the Effort

Problem: Entities underestimated the time and resources required.

Impact: Rushed filings, errors, missed deadlines.

Solution: Allocate sufficient resources—this is not a "one-person" job.

Pitfall 5: Separate Data Pipelines

Problem: Building separate data pipelines for BRSR and CCTS compliance.

Impact: Duplication of effort, inconsistent data.

Solution: Integrate data collection for both requirements.

What the CRH Report Found

A study by Climate Risk Horizons noted that the emission intensity reduction targets are too modest and bring only marginal change. The financial impact of buying carbon credits to offset shortfalls is currently small, typically less than 7% of the annual profit for large companies. For many high-margin polluters, "paying to pollute" could become a preferred business strategy.

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The Cost of Compliance: What Entities Actually Spent

Direct Compliance Costs

Cost Item	Estimated Range (₹)
Data collection and analysis	2-10 lakhs
ACV verification	3-15 lakhs
Form A preparation	1-5 lakhs
Portal registration	25,000 + 18% GST
Legal and advisory fees	3-10 lakhs
Total	9-40 lakhs

The Variation

Entity Size	Estimated Cost
Large integrated players	₹20-40 lakhs
Medium-sized entities	₹10-20 lakhs
Smaller entities	₹5-10 lakhs

The Cost as Percentage of Profits

According to the CRH analysis, the overall cost of polluting for major iron and steel, cement and aluminium companies during both compliance years is 7%, 2% and 0.6% of their total annual profits, respectively.

What This Means

Implication	Explanation
Low burden for large players	Compliance costs are a small fraction of profits
Higher burden for smaller players	Fixed costs are proportionally higher
No investment signal	Low costs do not incentivise deep decarbonisation

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The "Pay to Pollute" Reality – Did It Happen?

The Concern

The CRH study cautioned that the penalty of twice the price of carbon credits would be ineffective because of the low initial prices and market volatility. For many high-margin polluters, "paying to pollute" could become a preferred business strategy, undermining decarbonisation efforts.

The Evidence from the First Cycle

Observation	Implication
Low credit prices	~$10-11.50 per tonne
Low penalty	2× market price = ~$20-23 per tonne
High abatement costs	Often >$20 per tonne
Rational choice	For many, buying credits is cheaper than abatement

Did It Happen?

Early evidence suggests that some entities did choose to buy credits rather than invest in abatement. This is not necessarily a failure of the scheme—it is how carbon markets are supposed to work. Entities with high abatement costs buy credits from entities with low abatement costs.

The Concern

The concern is that too many entities will choose this path, leading to:

Outcome	Impact
No real emission reductions	The market becomes a "licence to pollute"
Weak price signal	Prices remain low
No investment	No incentive for deep decarbonisation

The Solution

Recommendation	Why
Tighter targets	Create genuine compliance pressure
Higher penalties	Make non-compliance more costly
Higher price floor	Prevent prices from falling too low
Independent regulator	Ensure credible enforcement

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The Penalty Question: Enforcement in the First Cycle

The Penalty Structure

Under the CCTS, the penalty for non-compliance is Environmental Compensation equal to twice the average market price of carbon credit certificates.

The Problem

Issue	Explanation
Low absolute penalty	At $10 per tonne, 2× is only $20 per tonne
Still cheaper than abatement	For many companies, paying the penalty may still be cheaper
No deterrent effect	Weak penalties do not deter non-compliance

The CRH Warning

The study cautioned that the penalty of twice the price of carbon credits would be ineffective because of the low initial prices and market volatility.

What Happened in the First Cycle

Observation	Implication
Some entities missed the deadline	Penalties may be applied
Some entities filed incomplete data	Potential penalties
Enforcement unclear	How will penalties be applied?

The Unknown

The full extent of non-compliance and penalty application is not yet known. The BEE will assess compliance following verification.

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The CBAM Connection: How Compliance Data Affects Export Competitiveness

The CBAM Reality

India's steel and aluminium exports to the European Union fell 24.4% in FY2025, with steel alone down 35.1%, before any CBAM financial obligation had taken effect. The decline suggests European buyers are already reorienting toward lower-emission producers.

The Compliance-Export Connection

Connection	Why It Matters
CCTS compliance data	Demonstrates carbon compliance to EU buyers
Emission intensity	Lower intensity means lower CBAM liability
Verified data	Credible evidence for CBAM declarations
Export competitiveness	Compliant entities are more competitive

What Exporters Must Do

Action	Why
Maintain verified emissions data	Essential for CBAM declarations
Demonstrate CCTS compliance	Shows carbon costs are paid in India
Reduce emissions intensity	Lowers CBAM liability
Engage with EU buyers	Build carbon compliance into contracts

The IEEFA View

"A credible domestic carbon market can strengthen India's long-term industrial competitiveness, regardless of how discussions on the EU's Carbon Border Adjustment Mechanism (CBAM) evolve".

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Recommendations for the 2026-27 Compliance Year

For Obligated Entities

Recommendation	Why
Start early	Begin preparation now—don't wait
Build MRV systems	Invest in robust monitoring and reporting
Engage ACV early	Verification takes time—start months before the deadline
Assess gap early	Know your position well in advance
Procure credits early	Prices may rise as the deadline approaches
Integrate data pipelines	Don't build separate systems for BRSR and CCTS

For Regulators

Recommendation	Why
Expand ACV capacity	More verifiers needed
Improve portal	Address technical issues
Provide guidance	Clearer guidance on Form A
Consider enforcement	Credible enforcement is essential
Tighten targets	Create genuine compliance pressure

For the Market

Recommendation	Why
Develop price discovery	Enable continuous price discovery
Build liquidity	Encourage trading activity
Financial intermediaries	Eventually include for depth

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How Carboned.in Can Help

At Carboned.in, we help obligated entities navigate the CCTS compliance process with clarity and confidence—and learn from the lessons of the first filing.

Our Services

Service	What We Do
Compliance Assessment	Assess your position for 2026-27
MRV System Design	Build robust monitoring and reporting
Baseline Calculation	Calculate 2023-24 emission intensity
Gap Analysis	Assess your compliance position
Form A Preparation	Ensure accurate and timely filing
ACV Coordination	Connect you with accredited verifiers
Portal Registration	Guide you through ICM Portal
Credit Procurement	Help you buy CCCs at the best price
Lessons Learned	Apply insights from the first filing

Why Choose Carboned.in?

Reason	Why It Matters
Legal Expertise	Led by Siddharth Gupta, Advocate, Calcutta High Court
Regulatory Knowledge	Deep understanding of CCTS and BEE
Practical Experience	Real-world experience with the first filing
End-to-End Support	From baseline to compliance

Your first consultation is completely free. No obligation. Just honest advice.

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Conclusion

The first CCTS compliance filing was a significant milestone for India's carbon market. It demonstrated that the scheme is operational and that entities can comply. But it also revealed significant challenges—data gaps, verification bottlenecks, portal issues, and the risk of "paying to pollute."

The lessons from the first filing must inform the second. Entities that learn from their mistakes and those of others will be better positioned for the 2026-27 compliance year.

Key Takeaways

Aspect	What You Need to Know
Deadline	July 31, 2026 (passed)
Entities	490 obligated entities
Main Challenges	Data, verification, portal, effort
Compliance Cost	₹9-40 lakhs
Key Lesson	Start early, build MRV, engage ACV early
Pay to Pollute	Real risk with weak targets and low prices
CBAM Connection	Compliance data affects export competitiveness

The Choice Is Yours

Option	Outcome
Learn from the first filing	Be better prepared for 2026-27, avoid penalties
Ignore the lessons	Face the same challenges, miss deadlines, incur penalties

How Carboned.in Can Help

At Carboned.in, we help obligated entities learn from the first filing and prepare for the next compliance year.

• Compliance Assessment: Assess your position
• MRV System Design: Build robust systems
• Gap Analysis: Know your position
• Form A Preparation: Ensure timely filing
• ACV Coordination: Connect with verifiers
• Credit Procurement: Buy CCCs at the best price

Your first consultation is completely free. No obligation. Just honest advice.