Navigating Carbon Markets: India’s Legal Pathways and Policy Dilemmas

India has developed a carbon market system through the Carbon Credit Trading System (CCTS) 2023 to support domestic compliance with international obligations under Article 6 of the Paris Agreement. However, this market design has several serious shortcomings. Chief among these is the CCTS’ ambiguity regarding additionality, a key component in assuring environmental integrity in market-based mechanisms. Although the Bureau of Energy Efficiency (BEE) will conduct additionality testing through the detailed procedure outlined in 2025, the testing will have no legal backing, nor will it contain methodology-specific details or provisions that would enable its implementation within the specific context of India. This article examines the Indian carbon market from both a legal and policy perspective to identify areas where definitional clarity is lacking, institutional arrangements are fragmented and oversight measures are insufficient. The BEE has been given extensive discretion over accreditation, credit and the approval of methodologies, raising conflict-of-interest concerns and weakening due process. The inclusion of non-obligated parties and voluntary actors in the market, without a concurrent increase in regulatory standards for participation, diminishes the programme’s credibility. The lessons from the failures of the Clean Development Mechanism (CDM), including the 2012 collapse of the CER price and critiques from international verification agencies such as Verra and the Gold Standard, provide evidence that excessive crediting and regulatory imitation can lead to significant problems. Therefore, it is contended that unless India develops legally defined terms, transparent methodologies for testing additionality and independent institutional oversight, the Indian carbon market will be unable to demonstrate any net emissions reduction or earn the confidence of other countries in their trading relationships. Only a legally grounded, contextually sensitive architecture will enable the Indian market to move beyond mere symbolic adherence and become a legitimate tool for climate governance.