India expands key climate action body ahead of carbon market launch

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The Indian government has reconstituted the National Designated Authority (NDA), doubling its members from 10 to 20, as the country prepares to launch its first carbon market next year.

For better coverage of sectors that could come under the carbon certificate trading system, the Ministry of Environment, Forest and Climate Change (MoEFCC), in a first, has also included members from the ministries of steel; ports, shipping and waterways; civil aviation; petroleum and natural gas. Other ministries that are a part of the NDA are external affairs, power, new and renewable energy, department of economic affairs, agriculture, and commerce and industry, apart from Niti Aayog.

The formation of the NDA was first notified in May, 2022. The new expanded NDA was notified and published on August 23, 2025. The secretary of MoEFCC is the chairperson of the authority.

A key task of the reconstituted NDA will be to identify and authorize projects that generate carbon credits. It is also meant to help India access international climate finance and carbon markets. Besides, the move is likely to help position India better as it has proposed to host the United Nations climate summit (COP 33) in 2028, a move supported by the BRICS nations in July.

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“The scope of the NDA had to be expanded with wider representation because we have multiple decarbonisation efforts going on simultaneously. Steel and refineries sectors have been given emission reduction targets and green hydrogen and its derivatives will be imbibed in the shipping and ports sectors. Aviation has been included because the use of sustainable aviation fuel is also in the works. All these will be the key sectors for India’s upcoming carbon market,” said a government official privy to the matter.

The Union government is likely to launch the long-awaited Indian Carbon Market in 2026, allowing for carbon certificate trading. Carbon markets provide a market-based mechanism to incentivise businesses and governments to reduce greenhouse gas emissions by creating a financial value for carbon reduction through buying and selling the so-called carbon credits.

The reconstituted NDA has also been empowered to evaluate, approve, and authorize projects aimed at achieving India’s climate goals as submitted to the United Nations Framework Convention on Climate Change (UNFCC).

The NDA comes under the Paris Agreement of which India is a signatory. The Paris Agreement is a legally binding treaty that commits nations to reduce their greenhouse gas emissions and limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels.

India’s Nationally Determined Contributions (NDCs) include reducing emissions intensity of GDP by 45% by 2030 (from 2005 levels), achieving about 50% electric power capacity from non-fossil fuel-based energy sources by 2030, and attaining net zero emissions by 2070.

India has achieved 50% of its installed power capacity from non-fossil fuel sources, five years ahead of target set in the Nationally Determined Contributions (NDCs), the government of India announced on July 14, 2025.