India Unveils Draft Green Credit Program to Incentivize Sustainable Practices

Posted by Written by Naina Bhardwaj Reading Time: 4 minutes

India recently unveiled its draft Green Credit Program Implementation Rules 2023, which enables participants to earn ‘green credits’ as incentives for their environmentally positive endeavors. This initiative is designed to encourage sustainable practices and positive environmental actions in different sectors. By participating in activities that generate green credits, private sector industries, companies, and other entities can fulfill their existing environmental obligations. While experts appreciate its focus on quantifying and rewarding multiple ecosystem services, concerns about greenwashing and monitoring rigor highlight the need for careful implementation and oversight. The program’s success will depend on striking a balance between market-based approaches and transformative environmental efforts.

Green Credit Program Implementation Rules 2023

In a bid to promote environment-friendly initiatives and incentivize positive environmental actions, India’s federal Ministry of Environment, Forests, and Climate Change (MoEFCC) has introduced the draft Green Credit Program Implementation Rules 2023. This innovative program offers stakeholders, including individuals, farmer-producer organizations (FPOs), industries, and local bodies, a unique opportunity to earn green credits for undertaking specific activities that contribute to a positive impact on the environment.

The MoEFCC released the draft rules on June 26, 2023, and has invited objections and suggestions within a 60-day period.

This initiative, which was initially announced in the 2023-24 Union Budget, aims to leverage a competitive market-based approach to incentivize voluntary environmental actions by various stakeholders.

The Indian government is developing green credits to mobilize a large-scale movement around environmentally responsible behavior and actualize the vision of “Mission LiFE (Lifestyle for Environment)” through pro-planet individuals and organizations to attain India’s goal of net zero GHG-emission by 2070.

How the Green Credit Program works

The Green Credit Program introduces the concept of green credits, which represent units of incentives provided for specific activities that have a positive impact on the environment. Unlike the domestic carbon market, which focuses solely on CO2 emission reductions, the green credit system incentivizes sustainable actions related to various activities, including:

  • Tree plantation-based green credit: Encouraging tree plantations and related activities to enhance the green cover across the country.
  • Water-based green credit: Promoting water conservation, harvesting, efficiency, and treatment or reuse of wastewater.
  • Sustainable agriculture-based green credit: Supporting natural and regenerative agricultural practices, land restoration, and improved productivity.
  • Waste management-based green credit: Promoting sustainable waste management practices, including collection, segregation, and treatment.
  • Air pollution reduction-based green credit: Encouraging measures to reduce air pollution and other pollution abatement activities.
  • Mangrove conservation and restoration-based green credit: Supporting initiatives focused on mangrove conservation and restoration.
  • Ecomark-based green credit: Encouraging manufacturers to obtain the ecomark label for their goods and services.
  • Sustainable building and infrastructure-based green credit: Promoting the construction of sustainable buildings and infrastructure using eco-friendly technologies and materials.

The Green Credit Program will establish thresholds and benchmarks for each activity, ensuring clarity and consistency in assessing environmental impact and determining credit eligibility.

A notable feature of the program is the tradability of green credits. Participants who earn credits will have the option to sell them on a proposed domestic market platform. This market-based approach provides flexibility and allows for the efficient exchange of credits.

Administration of the Green Credit Program

The administration of the Green Credit Program will be carried out by the Indian Council of Forestry Research and Education (ICFRE), which will be responsible for developing guidelines, processes, and procedures for the program’s implementation.

Stakeholder perspectives concerning the Green Credit Program

Benefits for organic farmers and FPOs

Experts have shown enthusiasm for the initiative, highlighting its ability to bring together various mechanisms to quantify and support ecosystem services, offering valuable support to organic farmers and FPOs.

They believe the program’s unique approach will reward projects for multiple ecosystem services, extending beyond carbon reduction and allowing project proponents to access carbon markets as well.

Concerns about greenwashing and incremental approach

Critics have expressed concerns over the possibility of greenwashing through market-based mechanisms, pointing out that incremental approaches may fall short of addressing the pressing need for actual emission reductions.

Greenwashing refers to the practice of making false or exaggerated claims about environmental sustainability or achievements to create a positive ‘brand’ image while not actually delivering significant environmental benefits.

Critics argue that relying solely on incremental market-based approaches may not be adequate to urgently reduce emissions. Additionally, extending this approach to other areas, like ecosystem and pollution management, runs the risk of presenting a facade of environmental responsibility without achieving substantial positive outcomes.

Rigorous monitoring and responsibility

The need for robust monitoring and accountability in pollution reduction and biodiversity preservation has been raised as a crucial consideration.

Critics argue that the resources allocated to monitoring and preventing fraud within these systems could be better utilized in more transformative initiatives for pollution control and biodiversity protection, typically regulated and mandated by the government.

These concerns underscore the importance of effectiveness and integrity when implementing the Green Credit Program.

Mission LiFE: India’s global initiative for sustainable living

India has launched Mission LiFE, a global initiative aimed at combating climate change and achieving the sustainable development goals outlined by the United Nations (UN). The concept of LiFE was unveiled during the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow in 2021.

The core principles of Mission LiFE revolve around the P3 model: Pro Planet People. It advocates for a circular economy that embraces the concepts of “Reduce, Reuse, and Recycle,” finding a balance between development, economic growth, and sustainability.

Mission LiFE emphasizes the role of individuals as trustees of the environment, nurturing resources rather than exploiting them.

How the Circular Economy Works

To foster a shift towards sustainability, Mission LiFE adopts a three-pronged strategy:

  • Nudging individuals: By encouraging simple yet effective environmentally friendly actions in daily life, Mission LiFE aims to inspire individuals to make sustainable choices.
  • Enabling industries and markets: It seeks to facilitate the swift response of industries and markets to changing demands for sustainability, encouraging the adoption of eco-friendly practices and products.
  • Influencing policy: It aims to shape government and industrial policies that support both sustainable consumption and production, creating a favorable environment for sustainable practices to thrive.

Mission LiFE presents an opportunity for businesses to align their operations with sustainable practices and tap into the growing demand for environmentally friendly products and services.

By embracing the principles of Mission LiFE, companies can contribute to the global movement towards a sustainable future while also fostering innovation, resilience, and long-term business success in the Indian market.

About Us

India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to for more support on doing business in India.

We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.