Strategic Importance
India Japan Joint Credit Mechanism for Climate Action: India and Japan have signed a Joint Credit Mechanism (JCM) under Paris Agreement Article 6.2. The pact enables both nations to collaborate on carbon trading, green finance, and clean technology deployment. It comes at a time when US tariffs on Indian exports and China’s rare earth restrictions have reshaped global trade dynamics.
Static GK fact: The Paris Agreement was adopted in 2015 during COP21 in Paris, and Article 6 provides the framework for international carbon markets.
Background of the Agreement
The JCM was signed between India’s Ministry of Environment, Forest and Climate Change (MoEFCC) and the Government of Japan. It is part of wider bilateral agreements worth nearly ¥10 trillion (approx. ₹6 trillion), covering defence, semiconductors, AI, and critical minerals. This enhances India’s strategy to emerge as a manufacturing hub with a clean energy focus.
Rare Earth Supply Chain Challenges
In April 2025, China restricted exports of rare earths like samarium, gadolinium, and terbium, exposing vulnerabilities in global supply chains. Although India later received partial relaxations, the disruption highlighted dependence on China. India is now encouraging domestic mining and processing, but faces technical and environmental hurdles in establishing a stable supply chain.
Static GK fact: China controls over 60% of global rare earth production, making diversification critical for India’s energy and manufacturing security.
Carbon Trading and Climate Finance
The JCM enables bilateral carbon credit trading that supports:
- Reduction of greenhouse gas emissions
- Technology transfer for decarbonisation
- Capacity building to meet climate targets
This mechanism is vital because global climate finance talks remain stalled, especially with the United States outside the Paris framework.
Static GK fact: India announced its Carbon Credit Trading Scheme in 2023, under the Energy Conservation Act, 2001.
Role of COP30
The JCM gains attention ahead of COP30 in Belem, Brazil (2025), where nations will debate rules for global carbon markets. With only 23 countries updating their NDCs, the India-Japan partnership shows how bilateral models can complement multilateral processes. Transparent rules for Internationally Transferred Mitigation Outcomes (ITMOs) will be crucial for credibility.
India’s Domestic Carbon Market
India has launched its own Carbon Market framework through the National Designated Authority for Article 6.2. The JCM will allow Japanese investments in clean energy projects, aiding India’s Net Zero 2070 target. Experts suggest this mechanism could become a model for other developing nations.
Static GK Tip: India’s Net Zero target by 2070 was announced at COP26 in Glasgow (2021) by Prime Minister Narendra Modi.
Static Usthadian Current Affairs Table
India Japan Joint Credit Mechanism for Climate Action:
| Topic | Detail |
| Agreement | India and Japan signed Joint Credit Mechanism (JCM) |
| Legal Basis | Paris Agreement Article 6.2 |
| Signatories | MoEFCC (India) and Government of Japan |
| Value | ¥10 trillion (approx. ₹6 trillion) bilateral agreements |
| Rare Earth Issue | China restricted exports in April 2025 |
| India’s Carbon Market | Launched in 2023 under Energy Conservation Act |
| Global Event | COP30 in Belem, Brazil (2025) |
| ITMOs | Internationally Transferred Mitigation Outcomes under Article 6.2 |
| India’s Target | Net Zero by 2070 |
| Significance | Enhances green investment, carbon trading, and bilateral cooperation |
