India’s Ministry of Power and the European Commission have agreed to strengthen technical cooperation on carbon markets and emissions trading systems. The meeting, held between Secretary (Power) Pankaj Agarwal and Gerassimos Thomas, Director-General for Taxation and Customs Union at the European Commission, focused on India’s developing carbon credit market and the EU’s Carbon Border Adjustment Mechanism.
Key facts
- Meeting held in New Delhi on 12 October 2026
- India’s Carbon Credit Trading Scheme covers 490 industrial units
- Non-fossil energy sources account for 308 GW of India’s 558 GW total installed power capacity
- Both sides agreed to work on carbon pricing recognition, monitoring systems and capacity building
- Discussions included India’s emission intensity reduction targets and EU’s CBAM implementation
India’s carbon market development
India has been building its domestic carbon market framework through the Carbon Credit Trading Scheme. Under this scheme, the government has notified emission intensity reduction targets for 490 industrial units, requiring them to reduce emissions or purchase carbon credits to meet compliance obligations. This mechanism aims to incentivise industrial units to adopt cleaner technologies and operational practices.
The Secretary highlighted that India’s renewable energy capacity has grown significantly, with non-fossil sources like solar, wind and hydropower now representing over half of the country’s total installed power generation capacity of 558 GW. This reflects India’s commitment to shifting its energy mix away from fossil fuels.
Understanding the EU’s Carbon Border Adjustment Mechanism
The European Commission’s Carbon Border Adjustment Mechanism is the EU’s policy to place a carbon price on imports of certain goods into the EU, preventing companies from relocating production to countries with weaker climate policies. This mechanism is significant for Indian exporters of steel, cement, fertilisers and other carbon-intensive products to Europe.
The EU side shared information on how CBAM will be implemented and how it relates to carbon pricing systems in other countries. This is particularly important for Indian industries to understand how their products will be assessed under the new EU rules.
Areas of cooperation agreed
Both sides committed to ongoing technical dialogue in several areas. These include recognition of carbon pricing mechanisms across different countries, which could help Indian companies’ credits be accepted internationally. They also agreed to work on monitoring, reporting and verification systems, which are technical frameworks that measure and track emissions reductions accurately.
Capacity building was identified as another priority. This means the EU and India will share expertise and training to help India’s government bodies, regulators and industries better implement carbon trading and emissions reduction strategies.
The two sides agreed to continue dialogue on CBAM-related methodologies, which refers to how products are assessed for their carbon content under the EU mechanism, and other areas of mutual interest in climate and energy policy.
What this means for Indian industry
Indian manufacturers, particularly those in steel, cement, chemicals and power sectors, need to track these developments closely. As India’s carbon credit scheme matures, companies should begin documenting their emissions reductions, as these may become relevant if India’s carbon credits gain international recognition. For exporters to Europe, understanding how their products will be classified and priced under CBAM is becoming essential to competitiveness.
Cooperation between India and the EU on technical standards for measuring and verifying emissions means Indian industries may eventually adopt systems compatible with international requirements, potentially opening doors to carbon credit markets beyond Europe.
What happens next
The two sides agreed to maintain continued dialogue on carbon markets and CBAM methodologies. Specific timelines or follow-up meetings were not mentioned in the announcement, but the commitment to technical engagement suggests regular communications will continue between the Ministry of Power and the European Commission.