“There should be a policy that spells out that revenue earned from carbon credits be treated as export earnings. A CDM-friendly legal and regulatory framework also needs to be defined,” according to a FICCI survey on Risks and Barriers to CDM projects in India.

While Indian industry has responded positively to CDM, the carbon market in India faces institutional, financial and technical impediments such as lack of capacity building, information, high transaction costs and absence of guarantees from funding organisations, it said. The survey, conducted across 50 companies from 17 industry sectors, underlines the need for an enabling environment in the country for carbon reduction projects.

Majority of the respondents felt that adequate information on carbon market transactions like prevailing prices of carbon credits and buyers should be made available. Over 66 per cent of the respondents said there is huge information gap related to CDM projects, while more than 54 per cent said lack of adequate capacity at the company level is a major problem.