The Benefits and Challenges of India’s Green Credit Program

Find out the challenges and benefits associated with India’s Green Credit program for achieving net zero targets.

India, as one of the world’s largest and fastest-growing economies, faces significant challenges in balancing economic growth with environmental sustainability. To tackle this issue, the Indian government has implemented various initiatives, one of which is the Green Credit Program (GCP). The Green Credit program aims to encourage industries and businesses to adopt sustainable practices by offering financial incentives. 


Financial Incentives 

Businesses that adopt environmentally-friendly practices and reduce their carbon footprint can earn Green Credits, which can be sold or traded. These credits can provide a new revenue stream for companies, leading to increased profitability and long-term financial stability.

Environmental Conservation 

By participating in the Green Credit program, businesses contribute to environmental conservation efforts. By adopting sustainable practices such as reducing greenhouse gas emissions, conserving water resources, and promoting renewable energy, companies can mitigate their environmental impact. This not only helps in conserving natural resources but also contributes to the overall goal of sustainable development.

Enhanced Corporate Image 

Engaging in sustainable practices through the Green Credit program can significantly improve a company’s corporate image. Consumers are increasingly concerned about the environmental impact of the products and services they use. By actively participating in the program, companies can demonstrate their commitment to sustainability. It helps them to attract environmentally conscious customers and gain a competitive edge in the market.

Access to Funding 

The Green Credit program can facilitate access to funding for businesses. Financial institutions and investors are becoming more inclined to support companies that have integrated sustainable practices into their operations. By participating in the program, businesses can showcase their commitment to environmental responsibility, making them more attractive to potential investors and lenders.


Absence of a standardized unit

In contrast to a carbon market that assigns a fixed price per metric ton of carbon emitted, the Green Credit Programme (GCP) currently lacks a standardized unit of measurement for quantifying the benefits obtained from different activities, such as tree plantations and sustainable infrastructure. The GCP is designed to operate as an independent market mechanism but could potentially intersect with the carbon market if the “green credit” also leads to a decrease in carbon emissions, as stated in the draft of the program.

Risk of Greenwashing 

The process of tracking carbon credits, which focuses on a single gas, is already a complex task that presents challenges in terms of regulation. Expanding this approach to other ecosystems and areas of pollution carries a significant risk of greenwashing. It also raises important concerns about the level of rigor in monitoring efforts and determining who should be held accountable for reducing pollution and preserving biodiversity. 

Green credits are intended to complement the actions of companies, and solely purchasing credits without taking internal measures is indicative of greenwashing. It can serve as a convenient way for companies to superficially align with sustainability activities and claim progress towards SDG goals. 

There is a possibility that companies can engage in greenwashing by engaging in false communication or exaggeration regarding their credits, purchasing unreliable credits, or acquiring credits that are unrelated to their specific sector of activity.

Lack of Clarity 

The method for calculating these credits remains ambiguous in the draft notification. Experts emphasize the need for careful measurement of the benefits derived from specific activities. For instance, awarding a waste-to-energy plant with a green credit could have adverse effects if the plant processes mixed waste, resulting in increased emissions.

Furthermore, the draft notification does not address the course of action in case fraudulent credits are identified.


The Draft Green Credit Programme Implementation Rules 2023 have been officially notified by the Ministry of Environment, Forest, and Climate Change. The public is invited to provide suggestions or raise objections regarding the draft. A 60-day period, starting from the date of notification on June 26th, is allocated for filing objections or submitting suggestions.

It is imperative for the government, industry stakeholders, and financial institutions to collaborate and create an enabling environment that encourages more businesses to participate in the program. It ultimately drives India’s transition toward a greener and more sustainable economy.

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Mousona Poddar

A passionate Content Writer who helps to scale your business by words with excellent research skills.

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