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The Government of India and the Government of Japan have introduced the Rules of Implementation (RoI) for the India-Japan Joint Crediting Mechanism (JCM), creating a structured framework for developing and implementing bilateral carbon credit projects under Article 6.2 of the Paris Agreement. For businesses seeking India-Japan Joint Crediting Mechanism consulting, Article 6 compliance services, carbon credit project registration or carbon credit advisory, the framework provides clear guidance on project approval, carbon credit issuance, monitoring, verification and international transfer of mitigation outcomes.
The new rules create opportunities for renewable energy developers, manufacturers, industrial facilities, waste management companies, infrastructure developers and ESG-focused organisations to collaborate with Japanese partners, access international climate finance, and generate internationally recognised carbon credits. At the same time, they introduce defined compliance requirements that businesses must follow throughout the project lifecycle.
India and Japan signed a Memorandum of Cooperation (MoC) on 7 August 2025 to establish the Joint Crediting Mechanism as a bilateral framework for implementing greenhouse gas (GHG) mitigation projects. The newly issued Rules of Implementation operationalise this partnership by defining how projects will be approved, validated, registered, monitored, verified and issued carbon credits.
The framework is aligned with Article 6.2 of the Paris Agreement, and establishes clear rules for carbon credit accounting, international transfers and measures to prevent double counting. For businesses, this creates new opportunities to participate in international carbon markets, secure carbon credit revenue, attract Japanese investment, and adopt advanced low-carbon technologies through bilateral partnerships.
The India-Japan Joint Crediting Mechanism (JCM) is a bilateral carbon market framework that enables India and Japan to jointly implement projects that reduce greenhouse gas (GHG) emissions. In return, the emission reductions achieved through these projects are converted into JCM credits, which are shared between both countries based on their agreed technical and financial contributions.
The mechanism operates under Article 6.2 of the Paris Agreement, allowing eligible carbon credits to be transferred internationally as Internationally Transferred Mitigation Outcomes (ITMOs). It promotes investment in low-carbon technologies, supports sustainable development and helps both countries achieve their climate commitments while ensuring transparency and preventing double counting of carbon credits.
Key Objectives of the India-Japan JCM
The Rules of Implementation have been introduced to achieve several strategic objectives including:
The newly issued Rules of Implementation establish a complete governance framework for developing, registering, monitoring, and issuing carbon credits under the India-Japan Joint Crediting Mechanism. Some of the major provisions include:
| Key Area | What the Rules Provide |
| Framework | Establishes the complete governance structure for implementing JCM projects in India. |
| Covered Greenhouse Gases | CO₂, CH₄, N₂O, HFCs, PFCs, SF₆ and NF₃ are eligible under the mechanism. |
| Crediting Period | Projects can select a crediting period of up to 10 years, including renewals where approved. |
| Carbon Credit Calculation | JCM credits are calculated based on the difference between Reference Emissions and Project Emissions. |
| Credit Sharing | Credits are allocated according to the technical, financial and operational contributions made by each participant. |
| Project Validation | Independent Third-Party Entities (TPEs) must validate all proposed projects. |
| Sustainable Development | Every project must prepare and implement a Sustainable Development Implementation Plan (SDIP). |
| Carbon Credit Registry | India and Japan will each maintain their own carbon credit registry. |
| Double Counting | The framework prohibits double issuance and requires corresponding adjustments for authorised credits. |
| International Transfers | Eligible JCM credits may be transferred as ITMOs under Article 6.2 of the Paris Agreement. |
The framework is designed for organisations that can demonstrate measurable greenhouse gas emission reductions through technology upgrades, energy efficiency improvements, or sustainable infrastructure projects. It also encourages collaboration between Indian businesses and Japanese investors or technology providers.
Some of the sectors expected to benefit include:
The Rules of Implementation establish a structured project lifecycle to ensure transparency, environmental integrity and accurate carbon accounting. Every project must pass through multiple approval and verification stages before carbon credits can be issued.
The typical JCM project cycle includes:
Carbon credits under the India-Japan JCM are issued only after emission reductions are independently verified, helping maintain transparency and compliance with Article 6.2 of the Paris Agreement.
One of the most important aspects of the India-Japan Joint Crediting Mechanism is the transparent calculation and allocation of carbon credits. Unlike conventional carbon markets, the JCM follows a structured methodology to ensure that only genuine and measurable emission reductions are rewarded.
Under the Rules of Implementation, JCM credits are calculated as the difference between Reference Emissions and Project Emissions. To maintain environmental integrity, the reference emissions are intentionally set below the expected Business-as-Usual (BaU) emissions, ensuring that projects deliver real as well as additional climate benefits.
Carbon Credit Calculation Framework
| Emission Type | Meaning |
| Business-as-Usual (BaU) Emissions | Estimated emissions if the project had not been implemented. |
| Reference Emissions | Conservatively determined emissions used as the benchmark for credit calculation. |
| Project Emissions | Actual greenhouse gas emissions after the project is operational. |
| JCM Credits | Difference between Reference Emissions and Project Emissions. |
The Rules do not prescribe a fixed percentage for sharing carbon credits. Instead, the Joint Committee, with approval from both governments, determines the allocation based on the contribution of each participant.
The following factors are considered while allocating credits:
This flexible approach allows every project to have a customised credit-sharing arrangement based on its investment structure rather than a standard allocation formula.
Businesses that want to register a project under the India-Japan Joint Crediting Mechanism must complete several regulatory and technical steps before they can receive carbon credits. The process begins with project planning and continues through validation, registration, monitoring, verification, and finally the issuance of JCM credits.
Since every stage is reviewed by the relevant authorities, businesses should ensure that their project documents, emissions data and supporting records are complete and accurate throughout the crediting period.
Key Compliance Requirements
To participate under the JCM, project participants are required to:
The Rules establish a governance framework to ensure that every project is assessed objectively and follows internationally accepted carbon accounting principles. Two key institutions oversee this process the Joint Committee and the Third-Party Entities (TPEs).
The Joint Committee is responsible for approving projects and making key decisions, while Third-Party Entities (TPEs) independently validate and verify projects before carbon credits are issued.
Responsibilities of the Joint Committee
The Joint Committee is jointly constituted by representatives from the Governments of India and Japan. It is responsible for:
Role of Third-Party Entities (TPEs)
Third-Party Entities independently validate and verify JCM projects before carbon credits can be issued.
Eligible TPEs include organisations that are:
Their primary responsibilities include:
The India-Japan Joint Crediting Mechanism requires projects to support sustainable development in addition to reducing greenhouse gas emissions. Businesses must demonstrate these benefits before their projects can qualify for carbon credit issuance.
To achieve this, project participants must prepare both a Sustainable Development Implementation Plan (SDIP) before project registration and a Sustainable Development Implementation Report (SDIR) during project implementation.
Sustainable Development Compliance Framework
Before registration, businesses must:
During project implementation, businesses must:
Projects that fail to adequately address sustainable development concerns may face delays in verification or carbon credit issuance, making SDIP and SDIR compliance an integral part of the JCM framework rather than a procedural requirement.
The Rules of Implementation create a structured pathway for Indian businesses to participate in international carbon markets while attracting investment and advanced low-carbon technologies from Japan. However, they also introduce new compliance responsibilities that organisations must meet before they can generate and trade JCM credits.
The level of impact will vary depending on the industry, project type, and the extent to which businesses plan to participate in carbon credit generation.
Renewable Energy Developers
Renewable energy companies are among the biggest beneficiaries of the JCM framework. Projects involving solar, wind, biomass, hydropower, and other clean energy technologies can potentially qualify for carbon credit generation, provided they satisfy the approved methodologies and monitoring requirements.
Business Impact
| Area | Impact |
| Project Financing | Carbon credit revenue can improve project viability and attract additional investment. |
| Technology Access | Easier collaboration with Japanese technology providers and investors. |
| International Recognition | Projects can generate internationally recognised mitigation outcomes. |
| Compliance | Developers must comply with project registration, monitoring, verification, and reporting requirements. |
Manufacturing and Industrial Facilities
Energy-intensive industries such as steel, cement, chemicals, textiles, automotive and engineering can use the JCM to implement emission reduction projects and improve operational efficiency.
Business Impact
| Area | Impact |
| Process Modernisation | Encourages adoption of cleaner production technologies. |
| Carbon Revenue | Additional income through verified carbon credits. |
| ESG Performance | Supports sustainability reporting and decarbonisation targets. |
| Investment Opportunities | Increases the attractiveness of projects to international investors. |
Waste Management and Circular Economy Businesses
Projects involving landfill gas recovery, methane capture, waste-to-energy, recycling, composting, and industrial waste treatment can benefit from the new framework.
Business Impact
Infrastructure and Real Estate Developers
Developers implementing energy-efficient buildings, green infrastructure, district cooling systems or smart city projects may also explore opportunities under the JCM.
The framework encourages businesses to integrate low-carbon technologies during project planning while improving long term environmental performance, and investor confidence.
Japanese Investors and Technology Providers
The Rules provide greater certainty for Japanese companies investing in emission reduction projects in India.
Key advantages include:
Beyond regulatory compliance, the India-Japan Joint Crediting Mechanism creates new commercial opportunities for businesses that invest in climate friendly technologies. Organisations that successfully register JCM projects can strengthen both their financial performance and sustainability credentials.
Some of the key opportunities include:
For many businesses, carbon credits may become an additional revenue stream that complements the commercial benefits of energy savings, operational efficiency, and sustainable business practices.
While the framework creates significant opportunities, it also introduces a comprehensive compliance process that businesses must manage throughout the project lifecycle. Organisations should assess these requirements early to avoid delays in project approval or carbon credit issuance.
Some of the major compliance challenges include:
| Challenge | Business Implication |
| Project Documentation | Preparing PINs, PDDs, SDIPs, monitoring reports, and verification documents requires technical expertise. |
| Methodology Selection | Projects must use an approved JCM methodology before registration. |
| Third-Party Validation | Independent validation and verification may increase project timelines and costs. |
| Continuous Monitoring | Businesses must maintain accurate emissions data throughout the crediting period. |
| Sustainable Development Reporting | Projects must demonstrate positive environmental and social outcomes in addition to emission reductions. |
| Government Approvals | Multiple approvals from both India and Japan are required at different stages of the project. |
| Registry Management | Participants must open and maintain registry accounts for receiving JCM credits. |
| Credit Allocation | Carbon credit sharing depends on technical and financial contributions, requiring clear commercial agreements between project partners. |
Registering a project under the India-Japan Joint Crediting Mechanism involves several approvals before carbon credits can be issued. Businesses should understand the requirements at each stage and keep the necessary technical documents ready to avoid unnecessary delays.
1. Check Whether Your Project Qualifies
Start by confirming that the proposed project falls within the activities approved under the India-Japan JCM and can use an approved methodology.
2. Submit the Project Idea Note (PIN)
Prepare the Project Idea Note (PIN) and submit it to the secretariat for initial review. Once the Joint Committee does not object, the project can move to the next stage.
3. Prepare the Required Project Documents
Develop the Project Design Document (PDD) and the Sustainable Development Implementation Plan (SDIP) along with the supporting technical information required for registration.
4. Get the Project Validated
An approved Third-Party Entity (TPE) reviews the project documents and validates that the project meets the applicable JCM requirements.
5. Apply for Project Registration
After validation and the required approvals from both governments, submit the registration request to the Joint Committee.
6. Monitor the Project
Once the project is registered, monitor greenhouse gas emission reductions according to the approved monitoring plan and maintain records for every monitoring period.
7. Apply for Carbon Credit Issuance
After the monitored results are independently verified, submit the verification documents and request the issuance of JCM credits through the prescribed process.
Following this roadmap helps businesses remain compliant while improving the efficiency of project implementation and carbon credit generation.
The India-Japan JCM Rules set out how carbon credit projects will be approved, implemented, and credits issued, giving businesses greater clarity on participating in the mechanism.
Key Benefits for India's Carbon Market
| Area | Potential Impact |
| International Climate Finance | Encourages investment from Japanese public and private entities into eligible mitigation projects. |
| Carbon Market Development | Strengthens India's participation in international carbon markets through a structured bilateral mechanism. |
| Technology Transfer | Promotes adoption of advanced low-carbon technologies across multiple sectors. |
| Industrial Decarbonisation | Supports businesses in reducing emissions while improving operational efficiency. |
| Climate Commitments | Helps India achieve its Nationally Determined Contributions (NDCs) through verified emission reductions. |
| Carbon Market Integrity | Introduces robust monitoring, verification, and accounting mechanisms to improve transparency. |
Like any new regulatory framework, the India-Japan Joint Crediting Mechanism introduces additional compliance obligations. Businesses must prepare detailed documentation, undergo third-party validation, maintain continuous monitoring records and obtain approvals before carbon credits can be issued.
While the new framework introduces additional documentation, validation and reporting requirements, it also provides businesses with a recognised process for developing carbon credit projects under the India-Japan JCM. Clear rules on project approval, carbon credit allocation and international transfers can make it easier for businesses to plan long-term investments and collaborate with Japanese partners.
Why the Framework Is a Positive Development
Challenges Businesses Should Consider
Although the framework introduces new compliance requirements, it also gives businesses a clear route to develop carbon credit projects and participate in international carbon markets.
Businesses planning to register a project under the India-Japan JCM should review the requirements before starting the application process. Preparing the necessary documents and identifying the right project at an early stage can help avoid delays during registration and approval.
Before applying, businesses should:
This approach can help businesses complete the approval process more smoothly and avoid unnecessary delays during project implementation.
With the introduction of the India-Japan Joint Crediting Mechanism (JCM), businesses must comply with detailed requirements related to project registration, validation, monitoring, verification, and carbon credit issuance. Corpseed offers comprehensive advisory services to help organisations successfully develop and manage JCM projects while ensuring full regulatory compliance.
1. JCM Project Eligibility Assessment
2. Project Documentation and Registration Support
3. Methodology Selection and Carbon Credit Advisory
4. Sustainable Development Compliance
5. Validation, Verification and Registry Support
6. Ongoing Compliance and Regulatory Advisory
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