Introduction: The First Year Is Done—What Now?
By the end of July 2026, the first major compliance deadline under India's Carbon Credit Trading Scheme (CCTS) will have passed. Obligated entities will have filed their Form A documents. Some will have earned Carbon Credit Certificates (CCCs). Others will have purchased them to meet their targets.
But the CCTS is not a one-year exercise. It is a multi-year, multi-decade transformation of India's industrial landscape. The choices made in 2026 and 2027 will shape the carbon market for the next 15 to 30 years.
As the IEEFA report notes, "Over the next two to five years, choices made by regulators, policymakers and market participants on market architecture, compliance obligations and price formation will shape how far the CCTS develops into a market capable of guiding capital-intensive industrial investment over 15- to 30-year horizons."
This guide looks ahead to 2027 and beyond. What's next after the first compliance year? What are the key developments to watch? And how should businesses prepare for the next phase of India's carbon market?
Lessons from the First Compliance Year (2025-26)
What Worked
| Aspect | Success |
|---|
| Regulatory clarity | The legal framework was established and implemented |
| Institutional setup | BEE, Grid-India, and CERC assumed their roles |
| Portal launch | The Indian Carbon Market Portal became operational |
| Sector coverage | Seven sectors were brought under compliance |
| Market infrastructure | Power exchanges were ready for trading |
What Could Improve
| Aspect | Challenge |
|---|
| Data quality | Some entities struggled with accurate emissions data |
| Verification capacity | Limited number of ACV agencies |
| Price formation | Trading volumes in early months may be thin |
| MSME challenges | Data gap for downstream exporters |
| MRV systems | Not all entities had robust MRV |
The Key Lesson
The experience of Korea and India's own PAT scheme show that market depth and price signals depend on two factors:
| Factor | Implication |
|---|
| Genuine scarcity | Targets must create real compliance pressure |
| Credible enforcement | Penalties must be meaningful and enforced |
The 2026-27 Compliance Year – Back-Loaded Targets
The Back-Loaded Structure
The targets are back-loaded: about 40% of the required reduction must be achieved in 2025–26 and the remaining 60% in 2026–27.
What This Means for Entities
| Aspect | Implication |
|---|
| Increased pressure | Compliance pressure increases significantly |
| Higher prices | Demand for CCCs may increase, driving prices up |
| More investment | Entities will need to invest in abatement |
| Tightened market | Surplus credits may be scarce |
Key Dates for 2026-27
| Date | Event |
|---|
| April 1, 2026 | 2026-27 compliance year begins |
| July 31, 2027 | Form A filing deadline for 2026-27 |
| September 30, 2027 | Verification submission deadline |
What Entities Must Do
| Action | Why It Matters |
|---|
| Plan ahead | Don't wait until the last minute |
| Invest in abatement | Reduce your compliance gap through efficiency |
| Procure early | Buy CCCs before prices rise |
| Build MRV systems | Ensure accurate monitoring and reporting |
Iron and Steel: The Next Big Sector to Join
The Draft Notification
The Ministry of Environment, Forest and Climate Change (MoEFCC) issued a draft notification on June 26, 2026 proposing to bring the iron and steel sector under mandatory GHG emission intensity targets under the CCTS.
The Numbers
| Metric | Value |
|---|
| Number of units | 255 iron and steel units |
| Combined baseline emissions | 358.6 million tonnes of CO₂ equivalent (MtCO₂e) |
| Baseline year | 2023-24 |
| Compliance year | 2026-27 |
| Unit of measurement | Tonnes of CO₂e per tonne of equivalent product |
| Target range | 2.1% to 9.3% (median ~5.5%) |
Major Companies Covered
| Company | Location |
|---|
| Tata Steel | Jharkhand |
| JSW Steel | Karnataka |
| Steel Authority of India Ltd. (SAIL) | Multiple locations |
| ArcelorMittal Nippon Steel India | Multiple locations |
| Jindal Steel and Power | Chhattisgarh |
| Rashtriya Ispat Nigam Ltd. (RINL) | Andhra Pradesh |
Why This Matters
| Aspect | Significance |
|---|
| Scale | 255 units added to the compliance mechanism |
| Emissions | 358.6 MtCO₂e—the largest sectoral expansion to date |
| CBAM exposure | Steel exports to the EU fell 35.1% in FY2025 |
| Decarbonisation | Steel is a hard-to-abate sector |
What Steel Producers Must Do
| Action | Timeline |
|---|
| Confirm obligated status | Immediate |
| Calculate baseline | 1-2 weeks |
| Understand target | 1-2 weeks |
| Assess gap | 1-2 weeks |
| Develop strategy | 2-4 weeks |
| File Form A | By July 31, 2027 |
Fertilizer: The Final Piece of the Puzzle
Current Status
Final targets for the fertilizer sector are still pending.
What We Know
| Aspect | Details |
|---|
| Status | Pending notification |
| Number of units | 35+ (estimated) |
| Baseline year | 2023-24 (expected) |
| Compliance year | 2026-27 (expected) |
Key Players
| Company | Location |
|---|
| IFFCO | Multiple locations |
| Coromandel International | Tamil Nadu |
| Gujarat State Fertilizers and Chemicals (GSFC) | Gujarat |
Why Fertilizer Matters
| Aspect | Significance |
|---|
| Emissions | Energy-intensive production process |
| CBAM coverage | Fertilizers are covered under CBAM |
| Scale | 35+ major units |
The Power Sector Question: When Will It Join?
The IEEFA Report's Focus
The IEEFA-EDF report examines the implications of incorporating the power sector.
Why the Power Sector Matters
| Factor | Significance |
|---|
| Emissions share | The power sector is India's largest source of emissions |
| Scale | Power sector incorporation would dramatically expand the CCTS |
| Complexity | Power sector has unique characteristics |
| Integration | Integration with existing power market regulations |
The Implications
| Aspect | Implication |
|---|
| Market size | Significant expansion of the carbon market |
| Compliance obligations | New obligations for power sector entities |
| Price signals | Stronger price signals for decarbonisation |
| Integration | Integration with existing power market regulations |
The Challenge
| Challenge | Description |
|---|
| Market integrity | Ensuring expansion doesn't compromise market integrity |
| Compliance pressure | Maintaining genuine scarcity and credible enforcement |
| Regulatory coordination | Coordinating with existing power sector regulations |
What to Expect
| Timeline | Likely Development |
|---|
| 2026-27 | Discussions and feasibility studies |
| 2027-28 | Potential draft notification |
| 2028+ | Power sector joins the CCTS |
CBAM and the India-EU FTA – The Trade Connection
The CBAM Reality
The EU's Carbon Border Adjustment Mechanism came into effect on January 1, 2026. The first quarterly price was set at EUR 75.36 per tonne of CO₂ equivalent.
The India-EU FTA
The India-EU FTA was concluded in late January 2026 and includes a dedicated annexure on CBAM.
| Provision | Description |
|---|
| Future flexibility | If the EU grants any future flexibility, it will be available to India |
| SME compliance | Provisions to help Indian SMEs meet compliance requirements |
| Verification | Provisions for verification and recognition of verifiers |
| Carbon price offset | Engage with EU authorities on taking into account the carbon price paid in India |
What This Means for 2027
| Aspect | Implication |
|---|
| FTA implementation | Likely in 2027 |
| Carbon price recognition | EU may recognise carbon prices paid through CCTS |
| Export competitiveness | Indian exporters could remain competitive |
| SME support | 90% compliance cost subsidy for SMEs |
The Offset Market – A Growth Story
The Offset Mechanism
The offset mechanism enables non-obligated entities to register eligible projects and earn Carbon Credit Certificates (CCCs).
Current Status
| Metric | Value |
|---|
| Methodologies | 12 launched by BEE |
| Registered entities | 40+ entities submitting projects |
| Sectoral scope | Biogas, hydrogen, forestry, agriculture |
2027 Growth Drivers
| Driver | Impact |
|---|
| New methodologies | More project types eligible |
| Compliance demand | Obligated entities buying CCCs |
| CBAM demand | Exporters buying credits |
| International linkages | Article 6 cross-border crediting |
What to Watch
| Development | Significance |
|---|
| New methodology approvals | Expanding project eligibility |
| Project registration growth | More supply of credits |
| International partnerships | Article 6 cooperation |
| Quality standards | CCP adoption and ratings |
The Indian Carbon Market Portal – 2027 Roadmap
Current Features
| Feature | Description |
|---|
| Entity Registration | Register obligated and non-obligated entities |
| CCC Issuance | Track and issue Carbon Credit Certificates |
| Validation and Verification | Manage third-party MRV processes |
| MRV Accreditation | Accredited monitoring, reporting, and verification bodies |
| Trading Integration | Connect with power exchanges for CCC trading |
2027 Roadmap
| Development | Expected Timeline |
|---|
| Enhanced analytics | Improved market data and insights |
| Mobile access | Mobile-friendly interface |
| International integration | Article 6 cross-border crediting |
| Automated MRV | Integration with digital MRV systems |
Why the Portal Matters
| Reason | Why It Matters |
|---|
| Centralised platform | Single point for all market activities |
| Digital efficiency | Reduces manual processes |
| Transparency | Public access to market data |
| Scalability | Supports market growth |
Price Evolution – What to Expect in 2027
2026 Starting Price
| Metric | Value |
|---|
| Starting price | ~$10-11.50 per tonne |
| Indicative floor | ₹800-1,200 per tonne |
2027 Price Expectations
| Factor | Impact on Price |
|---|
| Back-loaded targets | Increased compliance pressure → higher prices |
| Iron and steel inclusion | 255 new entities → higher demand |
| CBAM demand | Exporters buying credits → higher prices |
| Limited supply | Early market supply constraints → higher prices |
Projected Price Range for 2027
| Scenario | Expected Price |
|---|
| Base case | $12-18 per tonne |
| High demand | $18-25 per tonne |
| Low demand | $10-12 per tonne |
The IEEFA Roadmap – What the Report Says About 2027
The Four Themes
| Theme | 2027 Focus |
|---|
| Financial Market Participation | When will financial intermediaries join? |
| Responding to Border Carbon Costs | How will CBAM recognition evolve? |
| Sectoral Expansion | When will power and other sectors join? |
| Managing Offsets and Article 6 | How will international linkages develop? |
The 2027 Focus
| Focus Area | Why It Matters |
|---|
| Market architecture | How the market functions |
| Compliance obligations | Pressure on obligated entities |
| Price formation | What the carbon price signals |
| Investment | How the market guides investment |
The Long-Term View
"Over the next two to five years, choices made by regulators, policymakers and market participants on market architecture, compliance obligations and price formation will shape how far the CCTS develops into a market capable of guiding capital-intensive industrial investment over 15- to 30-year horizons."
Corporate Strategies for 2027
For Obligated Entities
| Strategy | Why It Matters |
|---|
| Procure early | Prices may rise in 2027 |
| Invest in abatement | Reduce long-term compliance costs |
| Build MRV systems | Ensure accurate monitoring and reporting |
| Engage with policymakers | Shape market design |
For Offset Project Developers
| Strategy | Why It Matters |
|---|
| Register projects | Capture first-mover advantage |
| Focus on quality | Higher-quality credits command premium |
| Seek CCP labelling | Access premium buyers |
| Build buyer relationships | Secure offtake agreements |
For Exporters
| Strategy | Why It Matters |
|---|
| Participate in CCTS | Demonstrate carbon compliance |
| Procure CCCs | Reduce CBAM liability |
| Document carbon costs | Support CBAM offset claims |
| Leverage FTA provisions | Use the CBAM annexure |
Regulatory Developments to Watch
In 2027
| Development | Impact |
|---|
| Iron and steel final notification | 255 units join the CCTS |
| Fertilizer notification | Final sector joins |
| FTA implementation | India-EU FTA takes effect |
| CERC trading regulations | Full operational framework |
| ACV agency accreditation | More verifiers become available |
Beyond 2027
| Development | Impact |
|---|
| Power sector joining | Major market expansion |
| Article 6 integration | International linkages |
| Price convergence | Towards global levels |
| CBAM expansion | 180 additional products from 2028 |
The 15-30 Year Horizon – A Long-Term View
The IEEFA Perspective
"Over the next two to five years, choices made by regulators, policymakers and market participants on market architecture, compliance obligations and price formation will shape how far the CCTS develops into a market capable of guiding capital-intensive industrial investment over 15- to 30-year horizons."
What This Means
| Implication | Significance |
|---|
| Long-term investment | Carbon markets guide long-term industrial investment |
| Policy stability | Consistent policy is essential for investment |
| Price certainty | Clear price signals are needed |
| Market depth | Liquid markets enable hedging and risk management |
The Opportunity
India has a unique opportunity to build a carbon market that:
- Guides long-term industrial investment
- Supports decarbonisation
- Maintains export competitiveness
- Creates economic value
How Carboned.in Can Help
At Carboned.in, we help businesses prepare for the next phase of India's carbon market with clarity and confidence.
Our Services
| Service | What We Do |
|---|
| 2027 Readiness Assessment | Assess your position for the next compliance year |
| Compliance Strategy | Develop a cost-effective plan |
| Credit Procurement | Help you buy CCCs at the best price |
| Offset Project Development | Help you register projects |
| CBAM Advisory | Help exporters navigate CBAM |
| Regulatory Intelligence | Keep you informed of developments |
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 CERC |
| Sector Experience | Knowledge across multiple sectors |
| Future Focus | Strategic perspective on market evolution |
Your first consultation is completely free. No obligation. Just honest advice.
Conclusion
2027 will be a pivotal year for India's carbon market. The back-loaded targets will increase compliance pressure. Iron and steel will join the CCTS. The India-EU FTA will likely be implemented. And the market will begin to find its equilibrium.
Key Takeaways
| Aspect | What You Need to Know |
|---|
| 2026-27 Targets | 60% of required reduction |
| Iron and Steel | 255 units to join |
| Fertilizer | Final sector to join |
| Power Sector | Discussions underway |
| CBAM | India-EU FTA implementation |
| Offset Market | Significant growth expected |
| Price | $12-18 per tonne (base case) |
The Choice Is Yours
| Option | Outcome |
|---|
| Prepare for 2027 | Meet compliance, avoid penalties, capture opportunities |
| Wait and see | Face higher costs, miss opportunities, lose competitive advantage |
How Carboned.in Can Help
At Carboned.in, we help businesses prepare for the next phase of India's carbon market with clarity and confidence.
- 2027 Readiness Assessment: Assess your position
- Compliance Strategy: Develop a cost-effective plan
- Credit Procurement: Buy CCCs at the best price
- Offset Project Development: Register projects
- CBAM Advisory: Navigate international carbon costs
Your first consultation is completely free. No obligation. Just honest advice.
