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The timing is significant. Just weeks before this breakthrough, on July 14, 2025, MoEFCC had issued a memorandum listing eligible activities under Article 6.2. For the first time, businesses, developers, and investors were given clarity on which sectors and technologies can generate credits under this framework. From renewable energy with storage, offshore wind, and solar thermal to green hydrogen, sustainable aviation fuel, compressed bio-gas, ocean energy, high-end energy efficiency, green ammonia, and carbon capture and storage, the government provided a clear playbook. This precision was not accidental. It was a deliberate move to signal readiness to both domestic and international stakeholders.
By coupling the eligibility framework with the Japan partnership, India has not only provided certainty but also delivered credibility. Under the Joint Crediting Mechanism (JCM), Japanese technology and investment will flow into Indian projects that were once financially unviable. In turn, the credits generated, formally known as Internationally Transferred Mitigation Outcomes (ITMOs), can be traded internationally, with Japan counting them toward its Nationally Determined Contributions (NDCs). For India, the benefits are manifold: foreign capital for clean technologies, domestic localisation of advanced equipment, and capacity building for monitoring and verification.
This is climate diplomacy elevated to economic statecraft. Both Prime Minister Narendra Modi and Prime Minister Shigeru Ishiba underlined the agreement as part of a shared “Green Energy Focus for a Better Future.” India and Japan, two nations with deep economic and cultural ties, are now writing a new chapter in global climate cooperation.
For businesses in India, the implications are immediate and far-reaching. Airlines finally have a credible pathway to finance sustainable aviation fuel. Heavy industries can deploy best-available decarbonisation technologies backed by foreign investment. Farmers and rural entrepreneurs can scale compressed bio-gas projects that link sustainable livelihoods to international carbon finance. Energy developers can accelerate offshore wind and storage-linked renewable projects with confidence that their efforts align with global markets. This is not just climate policy. It is industrial strategy, financial innovation, and rural development converging under one framework.
Financially, Article 6.2 creates multiple streams: revenues from carbon credit sales, direct foreign investment into clean energy projects, localisation of imported technologies to cut costs, and public–private partnerships in priority sectors like aviation and mobility. A sustainable aviation fuel facility in India, for example, could attract Japanese investment, cut airline emissions, and generate ITMOs while building a new domestic industry. The multiplier effect is enormous.
Yet challenges remain. Effective governance will require close coordination among multiple ministries through the National Designated Authority for the Implementation of the Paris Agreement (NDAIAPA), the designated nodal authority. Robust monitoring, reporting, and verification (MRV) systems must ensure environmental integrity. Negotiations over how credits are allocated between domestic commitments and international trade will need careful balance. Some technologies, like carbon capture, remain expensive and will demand blended finance solutions. However, with Cabinet approval in place, strong institutional backing, and India’s proven record under the Kyoto Protocol’s Clean Development Mechanism, these hurdles are surmountable.
What stands out most is the scale of ambition. With Article 6.2 operational, India is no longer a “future player” but an active participant in a global carbon market. The Indo-Japan partnership is the first chapter, but not the last. Europe, ASEAN, and the Middle East are natural next steps, each offering synergies in renewables, mobility, hydrogen, and industrial technologies. India’s framework is designed to be replicated, and the Cabinet has already authorised MoEFCC to negotiate further agreements.
For the world, this positions India as both a supplier of high-quality carbon credits and a destination for green investment. For the nation, it aligns climate action with economic growth, technology leadership, and rural development. And for investors, corporates, and developers, it sends one clear message: India’s carbon market is not just open. It is ready, credible, and ambitious.
This is a turning point. Article 6.2 has moved from negotiation rooms into real projects, real finance, and real opportunities. For those who have waited on the sidelines, the moment to act has arrived. The rules are set, the framework is live, and India has signaled with conviction that it is prepared to lead. The Indian carbon market is open for business, and the world is watching.
This article first appeared in The Daily Guardian on 10 October 2025.
