New Delhi

India is entering a phase where carbon emissions are no longer viewed only as an environmental concern but as a core business and financial variable, according to a report released by Rubix Data Sciences and Breathe ESG.

The report, titled “Carbon as a Business Variable: Trade, Risk, and the Evolution of India’s Carbon Market”, comes ahead of the operationalisation of India’s domestic carbon market in 2026. It highlights how carbon exposure is increasingly shaping export competitiveness, profitability, financing, and supply-chain decisions for Indian companies.

The study noted that global climate-linked regulations such as the European Union’s Carbon Border Adjustment Mechanism (CBAM) are putting pressure on export-driven industries including steel and aluminium by effectively converting carbon emissions into a direct export cost. The report warned that sectors such as cement and fertilisers could also face spillover effects in the coming years.

According to the findings, carbon efficiency is gradually becoming a determining factor in pricing power, market access, and long-term competitiveness. Regulatory expectations from institutions such as the Reserve Bank of India and the Securities and Exchange Board of India are also pushing companies and lenders toward deeper integration of carbon and ESG considerations into business operations.

India has emerged as a major participant in the voluntary carbon market, with more than 375 million carbon credits issued between 2010 and 2025. However, the report observed that a substantial share of the economic value generated through these credits flowed outside the country, with limited alignment to India’s domestic emissions reduction priorities.

The report stated that the proposed Carbon Credit Trading Scheme (CCTS) and the broader Indian Carbon Market framework are expected to help retain more economic and environmental value within India.

An analysis of over 1,100 Verra-certified Indian carbon projects conducted by Rubix found that only around one-third reached the registration stage successfully. Verification hurdles, monitoring costs, and regulatory uncertainty were identified as key factors affecting project monetisation and investor confidence.

The study further underlined that carbon and energy exposure are becoming increasingly relevant for lenders, insurers, and credit-rating frameworks. Financial institutions are facing growing pressure to incorporate carbon-related risks into credit assessments, underwriting practices, and portfolio evaluations.

Another major concern highlighted in the report was Scope 3 emissions, which arise across supply chains and often exceed a company’s direct operational emissions. Supplier-level carbon transparency is now becoming critical for procurement decisions, trade finance, and business continuity planning.

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Mohan Ramaswamy, Co-founder and CEO of Rubix Data Sciences, said a large share of carbon risk lies outside a company’s own operations and within its supply chain and financing relationships. He noted that businesses treating carbon only as a compliance issue may soon face indirect exposure through suppliers, exports, and financial linkages as global markets increasingly connect carbon performance with pricing and access to capital.