India's carbon credit trading scheme (CCTS) has been recognized by the United Kingdom as a qualifying criterion for pricing relief under the UK government's carbon border adjustment mechanism (CBAM), a move that would reduce tax burden on Indian exports to the country, an Indian government official said on Wednesday, September 9, citing a communication received from the UK Treasury Department.
The official said that the UK Treasury Department's communication to India's Bureau of Energy Efficiency (BEE) said that the CCTS has been included in the UK's published indicative list of overseas carbon pricing schemes assessed as qualifying criteria under a provision of the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026.
The CCTS has been notified by the Indian government with the objective of reducing, removing or avoiding greenhouse gas emissions by pricing such emissions through the trading of carbon credit certificates.
The financial support for implementation of the CCTS would be met by BEE from fees and charges collected from entities under the scheme and its own resources.
The UK government's recognition of the CCTS would mean that UK importers of eligible Indian good falling under CBAM would be able to seek carbon pricing reliefs corresponding to the effective carbon price borne by those goods under the CCTS, subject to satisfying the evidence and verification requirements under UK laws, the official said.
This would reduce the effective CBAM liability on Indian goods, directly benefiting Indian exporters to the UK, he added.
The recognition follows sustained technical-level engagement between the two governments on the design and implementation of the CCTS, he said.
Cooperation on carbon market design and implementation will continue through the UK-India Energy Memorandum of Understanding and the Partnership for Market Implementation, the official said.
The two governments are also committed to continued dialogue on carbon pricing, including on the interaction between the CCTS and UK CBAM rules, further strengthening India-UK engagement, he added.
