Budget 2026 Introduces a Rs 20000 Crore Carbon Credit Programme to Boost Farmers’ Incomes

In a landmark move towards environmental sustainability and industrial decarbonisation, the Union Budget 2026-27 has announced a Rs 20,000 crore Carbon Capture, Utilisation, and Storage (CCUS) support programme. 

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The initiative formalises India’s carbon market, allowing both industries and farmers to participate in carbon trading while contributing to a cleaner environment.

For Jasmit Singh Arora, widely recognised as the ‘Gutli Man of India,’ the announcement represents an opportunity long-awaited by farmers. Based in Kolkata, he has spent years guiding Indian farmers on sustainable practices that boost carbon capture through agriculture.

“This is a very productive allocation that has been done in the agriculture sector. Farmers can earn not just from their fruits, but also through carbon credits,” he tells The Better India.

Turning farmland into carbon assets

The programme integrates farmers into India’s carbon market through a structured, step-by-step process. Arora explains that the journey begins with participation in a project via a farmer-producer organisation (FPO), cooperative, or aggregator.

“Farmers will not go alone. Aggregators, project developers, or NGOs running carbon projects handle the paperwork, audits, and methodology. The farmer’s job is to implement and maintain the practices on their land,” he says.

Step 1: Join a project

Farmers must become part of a project run by an FPO, cooperative, or aggregator. These organisations make sure compliance with the technical requirements of carbon trading, making it feasible for farmers to participate without handling complex administrative work themselves.

Step 2: Prepare documentation

Basic KYC documents are needed, including Aadhaar, land ownership proofs, cultivation records, bank account details, and a mobile number. These form the foundation for participation and future payments.

Step 3: Select activities for carbon credits

Farmers choose from activities that improve carbon capture, including:

• Agroforestry and tree plantations: mango, timber, fruit trees on fields, bunds, or boundaries.
• Soil improvement practices: reduced tillage, organic fertilisers, and other regenerative techniques.
• Methane reduction practices: water management in paddy fields, direct-seeded rice, and other low-emission methods.

“The key is that these activities must create measurable carbon reductions compared to current practices,” Arora emphasises. “This is about changing farming practices in a way that benefits both the farmer and the environment.”

Step 4: Develop a project plan

Aggregators prepare a comprehensive project plan detailing:

• Participating farmers and plots
• Activity design (tree spacing, crop protocols, survival plans)
• Monitoring and documentation strategies (photos, geotagging, satellite monitoring)
• Benefit-sharing agreements and contracts

Step 5: Register the project

Projects are officially registered under the Indian Carbon Market (ICM) and Carbon Credit Trading Scheme (CCTS). Registration confirms farmers’ activities are recognised and verified, forming the basis for issuing carbon credit certificates.

Step 6: Record baseline

Before any credits can be claimed, the baseline is recorded. For soil projects, this involves soil tests and documenting current farming practices. For tree projects, land status, plantation plans, and maps are documented.

“Farmers must first record the baseline, like what is on the land today. Only by measuring the ‘before’ can we calculate the carbon captured ‘after’,” says Arora.

Step 7: Implement the project

Farmers carry out the registered activities, including planting trees, following improved farming practices, reducing tillage, and avoiding stubble burning. Correct implementation is important to generate real carbon credits.

Step 8: Monitor and maintain evidence

Evidence such as plantation dates, tree counts, photographs with geotags, and input usage records (fertiliser, irrigation, diesel) must be maintained. Some projects also use remote monitoring to track tree cover and growth.

Step 9: Third-party verification

Accredited Carbon Verification Agencies (ACVAs) audit the project to confirm carbon benefits are real and measured correctly. This verification step guarantees credibility before credits are issued.

Step 10: Issuance of carbon credit certificates

Once verified, Triple C certificates are issued and recorded in the Indian Carbon Market (ICM) registry. These certificates represent the farmer’s earned carbon credits and are ready for trading.

Step 11: Trading and payment

Credits can be sold on electronic trading platforms regulated by the Central Electricity Regulatory Commission (CERC). Farmers receive payments either directly or through aggregators who manage proceeds.

A win-win for farmers and the planet

For Arora, the programme is not just an income opportunity; it is a pathway to a healthier environment.

“Both industries and farmers benefit. Pollution is rising, AQIs are worsening, and this initiative will improve air, soil, and water for current and future generations,” he says.

By participating, farmers supplement their income while contributing to India’s climate goals. Arora and his Carbon Protection Force continue to provide guidance across the country. “Our goal is to help farmers store more carbon, generate credits, and benefit economically while supporting a cleaner environment,” he adds.

With official trading platforms expected to be active by mid-2026, India’s carbon credit market promises to change farmland into a valuable asset, benefiting both livelihoods and the planet.