India must adapt its strategy to a world of climate-inflected trade

The Centre must ensure that its decarbonization efforts are adequately recognized by trade partners

- PRACHI PRIYA & R.V. ANURADHA

India has turned its climate commitments into action through a broad and increasingly sophisticated policy architecture.

India has turned its climate commitments into action through a broad and increasingly sophisticated policy architecture. At the centre sits the Carbon Credit Trading Scheme (CCTS), its first explicit carbon-pricing mechanism that establishes emissions-intensity benchmarks for energy-intensive sectors such as cement, aluminium, petrochemicals, refining, pulp and paper, and textiles. Firms performing better than the benchmarks earn tradable carbon credits while underperformers must purchase credits or face penalties.

The emission intensity-based approach of the CCTS is an intelligent policy choice for a fast industrializing economy. Unlike absolute emission caps such as those followed by the EU, which fix total emission targets regardless of output, intensity targets encourage efficiency improvements while allowing production to expand.

Beyond a carbon market, India has steadily built a wider climate policy ecosystem: renewable consumption obligations to drive renewable energy uptake; extended producer responsibility regimes to promote recycling; the National Electric Mobility Mission and the National Solar Mission; investments in battery and grid-scale energy storage; green credit schemes; and climate finance taxonomy to guide private capital towards sustainable investment.