The United Kingdom has recognised India’s Carbon Credit Trading Scheme (CCTS) as a qualifying carbon pricing mechanism under its Carbon Border Adjustment Mechanism (CBAM), which is expected to reduce carbon-related costs for eligible Indian exporters.
This recognition means that UK importers of qualifying Indian goods can claim relief against their CBAM liability for the carbon price already paid under India’s CCTS, subject to British verification and evidence requirements.
The decision was confirmed by HM Treasury in a communication to India’s Bureau of Energy Efficiency under the Ministry of Power. The UK has added India’s scheme to its indicative list of overseas carbon pricing mechanisms that meet the criteria for carbon-price relief.
This is a big development for Indian exporters of carbon-intensive products like iron, steel and aluminium as it could help companies avoid paying carbon-related charges twice.
The UK is scheduled to introduce its CBAM on Jan. 1, 2027. The mechanism is intended to guarantee that some carbon-intensive imports pay a carbon price similar to that paid by British producers.
India’s CCTS aims to reduce greenhouse gas emissions by putting a price on carbon emissions through tradable carbon credits. The UK’s recognition is a massive breakthrough in India-UK trade and climate cooperation.
