Today on The CapTable: Why VCs are hesitant on India's carbon credit market

India notified a domestic carbon credit policy last year. While this policy is a step in the right direction, the industry's success will depend on the establishment of clear regulations and stronger connections with the global carbon trading market. 

Globally, the carbon credit trading market seems to be booming. Last year, $2.1 billion in carbon credits were traded across countries. India is not too far behind as it accounted for 17% of voluntary carbon credits issued between 2012-2022, highlighting its significant presence in the market.

With the global carbon credit trading market booming, startups in the space are attracting millions in funding. But Indian startups are lagging behind. This is particularly surprising given that India accounted for nearly a fifth of voluntary carbon credits issued between 2012-2022.

What’s stopping Indian VCs?

The reluctance of Indian venture capitalists to invest in carbon credit trading startups is primarily due to the absence of robust regulations governing the validation of carbon credits. Additionally, there is a lack of integration between India's carbon credit market and the global carbon economy, further deterring investors. These factors create an uncertain environment, making it challenging for investors to commit funds confidently.

But, what’s the way forward? Will Indian carbon credit trading startups continue to face challenges in attracting investor interest? Read to find out more in The CapTable.