"Carbon Credits as Financial Instruments: Analyzing Investor Perception and Market Efficiency in India"

Abstract India’s pledge to achieve net-zero carbon emissions by 2070 has transformed the financial landscape, introducing new opportunities in sustainable investment. Among them, carbon creditstradable certificates representing verified reductions in greenhouse gas emissions have become an important tool linking environmental responsibility with financial innovation. This paper examines investor perception of carbon credits and evaluates the efficiency of India’s emerging carbon credit market. Using a survey of 300 investors from Bengaluru, Mumbai, and Delhi, the study assesses levels of awareness, trust, and willingness to invest. Statistical analysis using regression and correlation methods shows that awareness and trust significantly influence investment intent, while high perceived risk deters participation. Market efficiency tests reveal partial weak-form efficiency, suggesting that India’s carbon credit prices do not yet fully reflect available information. The findings highlight the importance of regulatory transparency, investor education, and digital infrastructure in developing India’s green finance ecosystem. Keywords: Carbon Credits, Green Finance, Market Efficiency, Investor Perception, Behavioral Finance, India