India’s Carbon Credit Scheme Gets UK Recognition For CBAM Relief, Easing Carbon Tax Burden On Exporters

New Delhi, Sep 8 (KNN) The UK has recognised India’s Carbon Credit Trading Scheme (CCTS) as a qualifying carbon pricing mechanism for relief under its Carbon Border Adjustment Mechanism (CBAM), a move expected to lower the effective carbon tax burden on Indian exporters.

HM Treasury has included the CCTS in its indicative list of overseas carbon pricing schemes eligible for pricing relief under the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations, 2026, PTI reported, citing an official.

The recognition follows sustained technical-level discussions between India and the UK, with the Commerce Ministry pursuing the issue with British authorities.

Under the arrangement, UK importers of eligible Indian goods covered by CBAM can seek relief corresponding to the effective carbon price already paid on those goods under India’s CCTS, subject to UK evidence and verification requirements.

“This will reduce the effective CBAM liability on Indian goods, directly benefiting Indian exporters to the UK,” the official said, as quoted by PTI.

Relief Linked to Carbon Price Paid

India’s CCTS seeks to reduce, remove or avoid greenhouse gas emissions by putting a price on emissions through the trading of Carbon Credit Certificates.

The UK’s recognition is aimed at avoiding double carbon pricing on goods that have already been subject to an eligible carbon cost in their country of origin. However, the amount of relief available will depend on the effective carbon price borne by the goods, and importers will have to meet prescribed evidence and verification requirements.

The UK introduced legislation for its CBAM in December 2023, with the mechanism scheduled to begin in 2027. It will apply to carbon-intensive imports, including products such as iron and steel, aluminium, fertilisers, hydrogen, ceramics, glass and cement.

India and the UK implemented their comprehensive economic and trade partnership on July 15. Bilateral merchandise trade stood at USD 25.1 billion in 2025-26, while services trade reached USD 35.4 billion in 2024.

The two countries will continue cooperation on carbon market design and implementation through the UK-India Energy Memorandum of Understanding and the Partnership for Market Implementation.

(KNN Bureau)