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UK recognises India’s Carbon Credit Trading Scheme as a qualifying carbon pricing scheme under CBAM

The UK Government has included India’s Carbon Credit Trading Scheme (CCTS) in its list of qualifying carbon pricing schemes under the UK Carbon Border Adjustment Mechanism (CBAM). The recognition may allow eligible carbon prices paid under India’s CCTS to be considered for Carbon Price Relief, subject to the UK CBAM eligibility, verification, calculation and record-keeping requirements.

International Carbon Pricing & CBAMHM Revenue & Customs (HMRC), UK GovernmentAugust 27, 2026

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Full summary and practical implications

Official Recognition: On 27 August 2026, HM Revenue & Customs (HMRC) published the UK Government’s provisional list of current qualifying carbon pricing schemes (QCPS) for the UK Carbon Border Adjustment Mechanism (CBAM). The Indian Carbon Credit Trading Scheme (CCTS) is explicitly included on the list.

Purpose of Recognition: The UK Government states that where CBAM goods have already been subject to eligible carbon prices, Carbon Price Relief is intended to help prevent double taxation while maintaining the environmental integrity of the UK CBAM.

India CCTS Listed as a QCPS: India’s Carbon Credit Trading Scheme appears alongside other recognised schemes, including the EU Emissions Trading System, China National Emissions Trading System, Singapore Carbon Tax, South Africa Carbon Tax and other international carbon pricing frameworks.

Recognition Does Not Mean Automatic Relief: Inclusion on the qualifying schemes list does not automatically eliminate UK CBAM liability. The amount of Carbon Price Relief depends on the effective carbon price to which the embedded emissions have been subject.

Verification Requirement: To claim Carbon Price Relief, the relevant installation or supply chain must provide a completed Carbon Pricing Verification Form. The form must be completed by an independent verifier meeting the necessary UK requirements.

Effective Carbon Price Matters: Free allowances, rebates, refunds and other elements of a carbon pricing scheme can affect the effective carbon price and, consequently, the amount of Carbon Price Relief available.

Record-Keeping Responsibilities: Liable persons remain responsible for determining whether their goods are eligible for relief, making the claim and maintaining the required supporting records under UK CBAM rules.

UK CBAM Scope: The UK CBAM framework covers carbon-intensive goods in sectors including aluminium, cement, fertilisers, hydrogen and iron and steel. Companies exporting products or materials within the covered scope should assess their exposure and applicable emissions data requirements.

International Significance: The recognition provides an important signal that India’s emerging domestic carbon pricing framework is beginning to interact with international trade and carbon border mechanisms.

List Based on Current Information: The UK Government states that the published list is based on information available as of 19 June 2026 and will be kept under review as further overseas carbon pricing schemes are assessed or as existing schemes change.

Operator actions

What your team should do next

Identify UK CBAM exposure: Indian manufacturers and exporters should determine whether their products fall within the scope of UK CBAM, particularly for aluminium, cement, fertilisers, hydrogen, iron and steel supply chains.

Assess CCTS participation: Companies should determine whether their installation is subject to India’s CCTS Compliance Mechanism and whether an effective carbon price has been paid on emissions embodied in exported goods.

Build verification-ready emissions data: Maintain robust records for production, fuel consumption, electricity consumption, process emissions and embedded emissions to support both domestic CCTS compliance and UK CBAM requirements.

Understand Carbon Price Relief requirements: Recognition of the CCTS does not automatically result in relief. Companies and UK importers should understand the effective carbon price calculation, verification requirements and applicable UK CBAM rules.

Coordinate with UK customers and importers: Indian producers should engage early with UK importers because the UK importer or other liable person may require independently verified carbon pricing and emissions information from the manufacturing installation.

Prepare supporting documentation: Develop systems to maintain carbon pricing evidence, CCTS compliance records and independently verified information required for the UK Carbon Pricing Verification Form.

Monitor UK regulatory updates: The UK Government describes the qualifying carbon pricing schemes list as provisional and subject to review. Companies should monitor changes to UK CBAM regulations, guidance and the recognition status of overseas carbon pricing schemes.