India is preparing to expand its participation in international carbon markets as it advances compliance trading under the Carbon Credit Trading Scheme (CCTS) ahead of the International Civil Aviation Organisation’s (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) mandatory phase in 2027, according to Argus.
The move could create new opportunities for domestic emissions-reduction projects to attract international investment while strengthening India’s carbon trading framework. However, the use of Indian carbon credits for international aviation compliance will depend on eligibility rules, government authorisation and safeguards against double counting.
Speaking at the India SAF Conclave and Awards in New Delhi on 28 September, SAF Association (SAFA) Secretary General Rohit Kumar described the CCTS compliance market as the future of carbon trading in India. He said carbon prices under the scheme could reach $10 per tonne of carbon dioxide equivalent (CO₂e), potentially improving investment returns compared with voluntary carbon markets, where prices are not capped by a common regulatory ceiling.
India’s Carbon Credit Trading Scheme Prepares for Compliance Trading
India’s CCTS establishes a domestic compliance carbon market under which designated entities in emissions-intensive sectors must meet government-set greenhouse gas emissions-intensity targets.
Companies that outperform their prescribed targets can earn Carbon Credit Certificates (CCCs), while those that fail to meet their obligations must acquire certificates to achieve compliance. Trading in these certificates is overseen by the Central Electricity Regulatory Commission through approved exchanges.
The development of the compliance market could provide an additional source of demand for emissions-reduction activities, including industrial energy efficiency, process optimisation, fuel switching and low-carbon technology deployment.
For project developers and investors, the potential value of carbon credits will depend on market demand, certificate prices, regulatory rules and the credibility of the underlying emissions reductions.
Kumar said India’s substantial industrial base provides significant opportunities to reduce emissions through energy efficiency, renewable energy integration and the adoption of low-carbon technologies.
CORSIA 2027 Could Increase Demand for Eligible Carbon Credits
India is expected to participate in the second phase of CORSIA from 2027, when the scheme’s mandatory requirements apply to participating states and covered international aviation operations, subject to ICAO rules.
CORSIA allows airlines to address applicable offsetting obligations through eligible emissions units. Eligible sustainable aviation fuel (SAF) can also reduce an aircraft operator’s offsetting requirements, depending on the fuel’s lifecycle emissions performance and the scheme’s applicable rules.
According to industry participants cited by Argus, India’s proposed 1% SAF blending requirement in jet fuel may not be sufficient to meet future CORSIA-related compliance needs.
The potential connection between India’s domestic carbon market and international aviation compliance could therefore become increasingly important. However, carbon credits generated under the CCTS would not automatically qualify for CORSIA. The underlying programme and units must satisfy ICAO eligibility requirements, and international use would require the necessary host-country authorisation, including a Letter of Authorisation (LoA) where applicable.
In a separate comment to Argus, Kumar said CORSIA could become an important channel for accelerating India’s climate transition and strengthening its participation in international carbon markets as the relevant frameworks develop.
He also estimated that the global SAF market could reach $1 trillion by 2050, highlighting the potential role of carbon markets in mobilising investment in lower-emission aviation fuels and other climate-related projects.
India Seeks Greater Control Over International Carbon Credit Supply
India’s participation in global carbon markets raises questions about how domestic emissions reductions should be allocated between national climate targets and international buyers.
According to Argus, industry participants have called on the government to issue Letters of Authorisation for projects already aligned with CORSIA requirements. Without a clear authorisation process, international buyers may continue sourcing credits from overseas markets.
International carbon credit programmes used by airlines include Verra, Gold Standard, the American Carbon Registry (ACR) and the Climate Action Reserve (CAR). The International Air Transport Association’s Aviation Carbon Exchange provides a platform through which market participants can access eligible carbon credits.
India has sought to develop its own framework for authorising international carbon-credit transfers. In 2025, the government established the National Designated Authority for Implementation of Article 6 of the Paris Agreement (NDAIAPA) to assess, approve and authorise carbon-credit activities aligned with India’s Nationally Determined Contributions (NDCs) and relevant international mitigation mechanisms.
However, industry participants cited by Argus said greater clarity is still needed on how the framework will operate in practice.
Regulatory Clarity Needed for International Carbon Trading
The expansion of India’s carbon market into international trading will require predictable rules governing project approvals, credit eligibility, authorisation and accounting.
Kumar identified several areas requiring clarity, including host-country approval procedures, the eligibility of activities and credits under Article 6.2 of the Paris Agreement, and the authorisation of credits for international mitigation purposes such as CORSIA.
Other important issues include the treatment of first transfers and corresponding adjustments, registry systems and serial-number tracking, the distinction between authorised and non-authorised credits, and reporting in India’s Biennial Transparency Report.
Corresponding adjustments are particularly important because they help prevent the same emissions reduction from being claimed towards both India’s national climate target and an international buyer’s compliance obligation.
Under Article 6 of the Paris Agreement, international transfers of authorised mitigation outcomes require appropriate accounting to avoid double counting. This is relevant to CORSIA because an emissions reduction used by an airline to meet an international aviation obligation cannot also be claimed by India towards its own NDC in a manner inconsistent with the applicable accounting rules.
A clear regulatory framework could help developers, investors, carbon-crediting programmes, airlines and international buyers assess the eligibility and value of Indian carbon assets.
Carbon Markets Could Support SAF and Industrial Decarbonisation
India’s efforts to connect domestic carbon trading with international markets could have implications for sustainable aviation fuel and other low-carbon technologies.
SAF producers face challenges related to production costs, feedstock availability, lifecycle emissions performance and the development of reliable demand. Carbon-market mechanisms could potentially improve the economics of eligible emissions-reduction projects, although the extent of any benefit would depend on credit eligibility, market prices and applicable regulations.
For India, the opportunity extends beyond aviation fuels. Industrial energy efficiency, process improvements, renewable energy integration and fuel switching could all contribute to emissions reductions that support domestic climate objectives and, where authorised and eligible, international carbon-market participation.
The key challenge is to establish a framework that attracts investment while protecting the integrity of India’s climate accounting. The development of clear authorisation procedures, transparent registries and robust safeguards against double counting will be central to determining whether Indian carbon credits can secure a meaningful role in international markets as CORSIA’s mandatory phase approaches in 2027.
