Government of India Extends GEI Compliance to New Carbon-Intensive Sectors

The Government of India has expanded the Carbon Credit Trading Scheme (CCTS) by notifying Greenhouse Gas Emission Intensity (GEI) targets for additional carbon-intensive sectors. As per the notification dated January 13, 2026, Petroleum Refineries, Petrochemicals, Textiles, and Secondary Aluminium have been brought under the compliance framework of the Indian Carbon Market (ICM).

Coverage of Additional Sectors and Obligated Entities

With this notification, 208 entities across the newly covered sectors have been designated as Obligated Entities and are required to meet specified emission intensity reduction targets. 

This expansion raises the total number of obligated entities under the ICM’s compliance mechanism to 490, covering India’s most emission-intensive industries. Previously, in October 2025, GEI targets were notified for the Aluminium, Cement, Chlor-Alkali, and Pulp & Paper sectors, encompassing 282 obligated entities.

Overview of the Carbon Credit Trading Scheme

Notified in 2023, the Carbon Credit Trading Scheme provides the overarching framework for the functioning of the Indian Carbon Market. The scheme aims to reduce or avoid greenhouse gas emissions across the Indian economy by introducing a market-based mechanism that prices emissions through the trading of carbon credit certificates.

Compliance and Offset Mechanisms under CCTS

The CCTS operates through two mechanisms: the Compliance Mechanism and the Offset Mechanism. Under the Compliance Mechanism, emission-intensive industries identified as Obligated Entities must achieve assigned GEI targets. 

Entities that surpass their targets by achieving greater emission reductions are eligible to receive Carbon Credit Certificates, which can be traded with obligated entities that are unable to meet their prescribed targets.

Advancing India’s Climate and Net-Zero Goals

This development reflects years of sustained engagement with industry, rigorous technical assessments, and coordinated efforts among institutions and stakeholders. As sectoral coverage deepens and the compliance mechanism matures, the Indian Carbon Market is expected to play a pivotal role in aligning industrial growth with India’s long-term climate objectives and its pathway toward net-zero emissions.

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