Carbon Market Design In India: A Review of the Carbon Market’s Contribution to ESG

As the world's third largest emitter of green house gases, India has been revising its implicit carbon taxation policies to a more standardized carbon market by introducing Carbon Credit Trading Scheme (CCTS) in 2022. The present paper examines the evolving carbon policies of India, including coal cess, excise duties on fossil fuels, PAT scheme and Renewable Energy Certificate, and evaluates their collective contribution towards the E factor of ESG in India. Implicit carbon taxation encourages clean energy financing, but they have also remained inconsistent and fragmented. While emerging Indian Carbon Market puts much greater emphasis on transparency, efficiency and liquidity, it is expected to mobilize green finance, drive direct emission reductions and incentivize low carbon innovation. The paper thus concludes that a well-regulated and integrated carbon market and standardized policies will strengthen India's ESG performance and establish its position in global sustainable development.