India is preparing to launch compliance trading under its Carbon Credit Trading Scheme (CCTS) and access international carbon markets before the mandatory phase of the International Civil Aviation Organisation's (Icao) Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) begins in 2027.
The move could bolster the domestic carbon market and investment in emissions-cutting projects.
The CCTS compliance market represents the future of carbon trading in India, SAF Association (Safa) Secretary General Rohit Kumar said at the India SAF Conclave and Awards in New Delhi on 28 September. CCTS carbon prices could reach $10/t of CO2 equivalent (CO2e), offering investors better returns than voluntary markets, where prices are uncapped.
The CCTS is India's compliance carbon market, requiring obligated entities in emissions-intensive sectors to meet government-set greenhouse gas intensity targets. Firms that outperform their targets earn carbon credit certificates (CCCs), while those that fall short must acquire certificates to meet compliance obligations. Trading of CCCs is overseen by the Central Electricity Regulatory Commission through approved exchanges.
India is expected to participate in Corsia's mandatory second phase from 2027. Under the scheme, airlines can reduce their compliance obligations by using eligible sustainable aviation fuel (SAF) or through Corsia Eligible Emissions Units (CEEUs), which are generated through international green projects, to compensate for the additional carbon emissions.
India's proposed 1pc SAF blend in jet fuel alone may not meet future Corsia compliance requirements, industry participants said.
CCCs generated under the CCTS could potentially contribute to international aviation compliance only if the underlying credit programme and units satisfy Icao eligibility requirements and receive host-country authorisation. This would require host-country approval, including Letter of Authorisation (LoA) by the government for units to be traded and utilized internationally.
The global SAF market could reach $1 trillion by 2050, Kumar said, underscoring the role of carbon markets in attracting investment in high-quality green projects. "As the relevant frameworks develop, Corsia can become an important channel for accelerating India's climate transition and strengthening its participation in international carbon markets," Kumar told Argus separately.
Carbon security
The government should issue LoAs for projects already aligned with Corsia; otherwise, buyers may have to source credits from international markets, industry participants said. Major economies often buy credits from least developed countries (LDCs), where forestry and agriculture offer largely untapped carbon potential and domestic compliance obligations are limited or absent.
European airlines participating in Corsia typically source credits from Icao-approved international carbon crediting programmes. Platforms such as the International Air Transport Association (Iata) Aviation Carbon Exchange (ACE) provide access to crediting programmes including Verra, Gold Standard, American Carbon Registry (ACR) and the Climate Action Reserve (CAR) registry. These programmes issue carbon credits that airlines can buy and retire to comply with Corsia requirements.
India does not want to rely on overseas carbon credits. In 2025, it established the National Designated Authority for Implementation of Article 6 of the Paris Agreement (NDAIAPA) to assess, approve and authorise carbon-credit projects aligned with India's Nationally Determined Contributions (NDCs) and international mitigation schemes such as Corsia. But the framework and its implementation remain unclear.
Regulatory hurdles
India's carbon market can expand internationally if project developers, crediting programmes, investors, airlines and overseas buyers operate under a predictable framework, Safa's Kumar said.
The framework should define host-country approval and LoA requirements; eligibility of activities and credits under Article 6.2; authorisation for other international mitigation purposes, including Corsia; first transfers and corresponding adjustments; registry and serial-number tracking; treatment of authorised and non-authorised credits; reporting in India's Biennial Transparency Report; and safeguards against double counting, claiming and use.
"India's key advantage is the scale of its mitigation opportunity. Its large energy-intensive industrial base offers substantial potential for energy efficiency, process optimisation, fuel switching, renewable-energy integration and deployment of low-carbon technologies," Kumar added.
Under Article 6 of the UN Paris Agreement, a carbon credit cannot count towards both a country's NDC and an international aviation obligation such as Corsia. India therefore needs clear rules to prevent double counting. The government is developing a framework to meet Corsia requirements, support domestic climate goals and build a strong carbon asset base for global markets.
