The UK has recognised India’s Carbon Credit Trading Scheme (CCTS) as a qualifying carbon pricing mechanism under its Carbon Border Adjustment Mechanism (CBAM), as per The Moneycontrol news report. The decision could lower the carbon-related liability on eligible Indian goods entering the UK.
CCTS gets UK recognition
UK HM Treasury confirmed the decision in a communication to the Bureau of Energy Efficiency (BEE), Ministry of Power. The CCTS has been included in the UK’s indicative list of overseas carbon pricing schemes that qualify for carbon price relief under its CBAM rules. The Commerce Ministry had been pursuing the matter with the UK. The recognition follows technical discussions between the two governments on the design and implementation of the CCTS.
Relief on carbon cost
UK importers of eligible Indian goods covered under CBAM can seek relief for the effective carbon price already paid on those goods under India’s CCTS. The claim will be subject to the evidence and verification requirements under UK law.
The amount of relief will depend on the effective carbon price paid on the emissions linked to the imported goods. This arrangement is aimed at avoiding a situation where a carbon cost is applied in both India and the UK.
CBAM to begin in 2027
The UK decided in December 2023 to introduce CBAM from January 1, 2027. The mechanism will impose a carbon-related charge on certain imported goods based on their embedded emissions. Products covered include aluminium, cement, fertiliser, hydrogen, and iron and steel. The UK had earlier indicated that imports of such carbon-intensive products would be subject to the new mechanism.
India’s Carbon Credit Scheme
India notified the CCTS to reduce, remove or avoid greenhouse gas emissions by putting a price on emissions through the trading of Carbon Credit Certificates. The scheme’s implementation will be funded by the Bureau of Energy Efficiency through fees and charges collected from entities covered by the scheme, along with its own resources.
India-UK trade
India and the UK implemented their comprehensive economic and trade partnership on July 15, 2026. Merchandise trade between the two countries was $25.1 billion in 2025-26, while bilateral services trade stood at $35.4 billion in 2024.
The two countries will continue discussions on carbon pricing and the interaction between the CCTS and UK CBAM rules through the UK-India Energy Memorandum of Understanding and the Partnership for Market Implementation.
Conclusion
The recognition means eligible carbon costs paid in India can be taken into account when calculating the UK CBAM liability on covered Indian imports.
