NEW DELHI, July 5 — India’s trade-pact strategy needs a more forward-looking and equitable approach as climate policy gets entangled with trade, geopolitics and industrial policy, officials and analysts note. Aligning the country’s trade posture with its climate actions is crucial, and the government should aim to ensure that India’s decarbonization efforts are adequately recognized by trade partners. 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, or CCTS, its first explicit carbon-pricing mechanism. The scheme 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, the source material states. Unlike absolute emission caps such as those followed by the European Union, 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 drive renewable energy uptake.
Extended producer responsibility regimes promote recycling. The National Electric Mobility Mission and the National Solar Mission are in place, alongside investments in battery and grid-scale energy storage. Green credit schemes and a climate finance taxonomy guide private capital towards sustainable investment.
These policies highlight India’s challenge of addressing the intersection of trade and climate. For a Kazakh journalist watching Central Asian markets, the pattern is familiar: resource-rich economies must navigate shifting global rules as buyers demand cleaner supply chains. India, unlike many Central Asian states, has the industrial scale to shape its own response.
The CCTS approach matters for trade partners. By setting intensity benchmarks rather than absolute caps, India avoids capping production growth while still pushing heavy industry to cut emissions per unit of output.
That design could make Indian exports more attractive in markets where carbon border adjustments are emerging, though the source material does not specify which trade partners have signaled acceptance of the scheme. What is clear is that the government is building multiple mechanisms simultaneously — a strategy that could help Indian exporters preempt tougher climate trade measures from major buyers. The coming months will test whether trade partners recognize India’s decarbonization efforts under the CCTS and related policies.
For now, the government appears to be betting that a homegrown carbon market, combined with renewable mandates and green finance rules, will give Indian industry a competitive edge in a world where climate-focused trade measures are becoming the norm.
