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), a move expected to reduce the carbon-related cost faced by Indian exporters.
Under the arrangement, UK importers bringing eligible Indian goods covered by CBAM will be able to seek carbon price relief for the effective carbon price already paid in India. This is intended to prevent exporters from effectively paying twice for the same carbon emissions—once under India’s system and again through the UK’s CBAM.
The measure is particularly important for India’s iron and steel, aluminium, cement, fertiliser and hydrogen sectors, which fall within the scope of the UK CBAM. The mechanism is scheduled to take effect from January 1, 2027.
The UK government’s official list of qualifying carbon-pricing schemes now includes India’s CCTS alongside systems such as the EU Emissions Trading System, China’s national emissions trading system, Japan’s GX-ETS and South Korea’s emissions trading system.
For Indian exporters, the recognition could help lower the effective CBAM liability and improve cost competitiveness in the UK market. The actual relief, however, will depend on the carbon price effectively paid under India’s scheme and compliance with UK requirements for evidence, calculation and verification.
The development comes as India and the UK deepen their broader trade relationship following the implementation of the UK-India Comprehensive Economic and Trade Agreement (CETA) in July 2026. Recognition of India’s carbon-pricing framework could strengthen the benefits of the trade agreement for carbon-intensive Indian exports and may also support India’s efforts to secure similar treatment in other major markets.