The was valued at USD 33,685.37 Million in 2025 and is expected to reach USD 4,05,472.04 Million by 2034. It is projected to grow at a CAGR of 31.84% during the forecast period 2026-2034. The market is growing due to regulatory frameworks, corporate decarbonization efforts, expanding voluntary carbon markets with nature-based solutions, and increasing renewables participation across industries. The report presents a thorough review featuring the India Carbon Credit Market Forecast, share, trends, and research of the industry.

STUDY ASSUMPTION YEARS

• Base Year: 2025
• Historical Year/Period: 2020-2025
• Forecast Year/Period: 2026-2034

INDIA CARBON CREDIT MARKET KEY TAKEAWAYS

• Current Market Size: USD 33,685.37 Million in 2025
• CAGR: 31.84% (2026-2034)
• Forecast Period: 2026-2034
• Type Segment: Voluntary carbon credits dominate with 58.04% market share in 2025 due to corporate sustainability commitments and nature-based projects.
• Project Type Segment: Avoidance/reduction projects lead with 52.1% share reflecting emphasis on renewables and efficiency.
• End-Use Industry: Power is the largest segment with 20.05% share owing to decarbonization mandates.
• Region: North India leads with 31% share, driven by energy-intensive industries concentration.
• Key Players operate in a fragmented landscape, collaborating to enhance credit quality and market infrastructure.

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MARKET TRENDS

The Indian government is institutionalizing a compliance carbon market through robust frameworks. The Carbon Credit Trading Scheme replaces the former Perform, Achieve and Trade program with a credit-based intensity system targeting nine energy-intensive sectors. Emission baselines from 2023-2024 data enable full operationalization by fiscal 2026. This regulatory infrastructure drives market growth and compliance participation across industrial players.

Voluntary carbon markets in India are expanding rapidly through community-based, nature-focused projects. From January 2022 to June 2023, registered projects under Verra and Gold Standard increased from 921 to 1,451. The Green Credit Programme supports tree planting on degraded lands granting digital credits. These initiatives deliver both environmental and social co-benefits, broadening market participation.

Innovative carbon credit generation techniques are emerging, notably the first floating solar project registered in Tamil Nadu in October 2024 under Verified Carbon Standard. This 24.7 MW plant is expected to reduce CO2 emissions by approximately 38,376 tons annually. These technology-driven approaches highlight India’s potential to scale advanced renewable energy carbon initiatives.

MARKET GROWTH FACTORS

The comprehensive Carbon Credit Trading Scheme introduces an intensity-based baseline-and-credit regulatory framework with mandatory greenhouse gas emissions intensity targets. Covering sectors like cement, steel, fertilizers, and textiles, this policy creates clear compliance pathways that enable companies to strategize decarbonization effectively and integrate carbon pricing into their operations, thus underpinning long-term market growth.

Increasing corporate Net Zero commitments are a vital growth driver. Industrial entities are investing in carbon reduction measures and credit mechanisms while establishing internal accounting systems and emissions inventories. Diverse voluntary crediting methodologies encourage offset project development, reshaping corporate investment decisions and supporting sustainability ambitions aligned with national emission reduction goals.

Expansion of India's voluntary carbon markets through nature-based solutions serves as another growth engine. Projects such as tree planting on degraded lands and household biogas generation produce tradable carbon credits while promoting sustainable development and rural livelihoods. Growing recognition of carbon finance for environmental and social impact motivates more initiatives to seek certification, enhancing market robustness.

MARKET SEGMENTATION

Segment Category: Type

• Compliance
• Voluntary

Description:The market is segmented by type into compliance and voluntary carbon credits, with voluntary dominating due to flexibility and corporate sustainability efforts.

Segment Category: Project Type

• Avoidance/Reduction Projects
• Removal/Sequestration Projects:
• Nature-based
• Technology-based

Description: Projects are categorized based on mitigation approach, with emphasis on renewable energy, industrial efficiency, and nature-based offsets for scalability and impact.

Segment Category: End Use Industry

• Power
• Energy
• Aviation
• Transportation
• Buildings
• Industrial
• Others

Description: The market covers various end-use industries, with power constituting the largest share due to decarbonization mandates and renewable shifts.

Segment Category: Region

• North India
• South India
• East India
• West India

Description: Regional segmentation highlights North India as the dominant region due to concentration of energy-intensive industries and supportive agricultural projects fostering carbon credit activities.

REGIONAL INSIGHTS

North India dominates the India carbon credit market with a 31% share in 2025. This dominance is attributed to its dense energy-intensive industrial base including iron and steel, cement, and textiles in states like Uttar Pradesh, Haryana, and Punjab. The region’s agricultural potential also supports nature-based carbon projects, making North India a key hub for carbon credit generation and market participation.

RECENT DEVELOPMENTS & NEWS

In December 2025, IIT-Roorkee partnered with the Uttar Pradesh government to launch a program enabling farmers to generate carbon credits, potentially earning Rs 5,000 to Rs 8,000 per hectare annually. This government initiative broadens farmer participation beyond private companies.

In October 2025, the Government of India announced final greenhouse gas emission intensity targets for initial industrial sectors under the compliance Carbon Credit Trading Scheme (CCTS), establishing a regulatory foundation for domestic carbon markets and operationalizing compliance mechanisms.

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