UK recognises India’s carbon credit trading scheme, relief for Indian exporters
The United Kingdom will recognize India's carbon credit trading scheme. This recognition will help Indian exporters avoid double taxation on goods. British importers can now seek carbon price relief under the UK's mechanism. This move supports India's bid for similar arrangements with the European Union. Cooperation on carbon market design will continue through established partnerships.
The United Kingdom has agreed to recognize India's carbon credit trading scheme (CCTS), a move that will benefit Indian exporters by potentially reducing their carbon border adjustment mechanism (CBAM) liability and alleviate double taxation on exported goods. This decision comes after months of technical negotiations between the UK and Indian governments to finalize the details of the CCTS.
The CBAM, which is set to come into effect on January 1, 2027, will impose a carbon price on the emissions embedded in imports of specified goods such as aluminium, cement, fertiliser, hydrogen, and iron and steel. By recognizing India's CCTS, the UK will allow British importers of eligible Indian goods to claim carbon price relief equivalent to the effective carbon price paid on those goods under the Indian scheme.
This relief will directly reduce the CBAM liability on Indian goods, providing a significant advantage to Indian exporters.
Officials highlighted that this recognition follows sustained technical-level engagement between the two countries on the design and implementation of the CCTS. India had previously attempted to include a carbon tax in trade negotiations with the UK, but their proposal was not accepted at that time. The Comprehensive Economic and Trade Agreement (CETA) between India and the UK, which entered into force on July 15, 2026, paved the way for this recognition.
The UK's CBAM list of recognized carbon pricing schemes currently includes 16 schemes, such as the EU Emissions Trading System (ETS), China's national ETS, and India's CCTS. The list also encompasses other countries like South Korea, Japan, Canada, Chile, Kazakhstan, Montenegro, New Zealand, Serbia, Singapore, South Africa, Switzerland, and Taiwan.
This agreement with the UK is expected to bolster India's efforts to negotiate similar carbon credit recognition in its trade deal with the European Union. The UK-India Energy Memorandum of Understanding and the Partnership for Market Implementation will continue to foster cooperation on carbon market design and implementation between the two nations.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
