India & Japan Sign JCM Article 6.2

India and Japan have recently signed a Joint Credit Mechanism (JCM) agreement under Article 6.2 of the Paris Agreement, marking a significant step in carbon trading, climate finance, and sustainable technology collaboration. This agreement not only strengthens bilateral cooperation but also provides India a strategic alternative amid US tariffs on Indian goods and China’s rare earth export restrictions.

Background and Strategic Importance of JCM Article 6.2

The JCM Article 6.2 agreement was signed between India’s Ministry of Environment, Forest and Climate Change, and the Government of Japan. It is part of a long-term bilateral framework worth approximately ¥10 trillion (₹6 trillion) covering areas such as:

• Artificial intelligence

• Defence

• Semiconductors

• Critical minerals

At a time when the US has imposed 50% tariffs on Indian exports and withdrawn from the Paris Agreement, the India-Japan JCM agreement serves as a vital mechanism to boost India’s manufacturing sector and advance its position as a leader in sustainable technologies.

Rare Earth Supply Chain Challenges

China’s April 2025 ban on exports of key rare earths such as samarium, gadolinium, and terbium disrupted global supply chains. Although restrictions were later eased for India, the country’s dependence on China was exposed.

This situation has prompted India to focus on domestic mining and processing of rare earths, although establishing a stable supply chain remains technically and environmentally challenging.

Carbon Trading and Climate Finance under JCM Article 6.2

The JCM Article 6.2 allows for bilateral carbon credit trading between India and Japan, promoting:

• Greenhouse gas reduction through market mechanisms

• Technology transfer for decarbonisation

• Capacity building to meet climate targets

This bilateral carbon trading scheme is crucial, especially as global climate finance negotiations remain stalled and the US remains outside the Paris framework. Through this mechanism, India can generate and trade Internationally Transferred Mitigation Outcomes (ITMOs) while attracting green investments and deploying low-carbon technologies.

Role of COP30

The JCM Article 6.2 gains further significance ahead of COP30 in Belem, Brazil, where discussions will focus on rules for global carbon markets. Currently, only 23 countries have submitted updated climate pledges (NDCs).

The India-Japan cooperation on carbon credits through JCM exemplifies how bilateral agreements can complement global climate negotiations. It also highlights the urgent need for transparent rules for carbon trading to ensure credibility and efficiency.

India’s Domestic Carbon Market

India launched its Carbon Credit Trading Scheme in 2023 and established a national designated authority to oversee emissions trading.

Investments from Japan under JCM Article 6.2 will support the deployment of clean energy technologies, assisting India in achieving its Net Zero by 2070 target. Experts believe this model can serve as an example for other nations seeking bilateral climate partnerships.

Exam-Oriented Key Takeaways

For SSC aspirants, understanding JCM Article 6.2 is crucial as it covers:

• Flexibility under Article 6.2 of the Paris Agreement to meet NDCs through tailored agreements

• Technology exchange and capacity building between partner countries

• Facilitation of financial resource flows from developed to developing countries

• Enabling developing countries to generate and trade ITMOs

• Bilateral carbon credit trading mechanisms supporting India’s sustainable development

Additionally, the role of JCM in global carbon markets, differences between Article 6.2 and Article 6.4, and technology transfer under JCM Article 6.2 are important topics for exams.

Final Thoughts

The JCM Article 6.2 agreement between India and Japan marks a significant milestone in global carbon trading and climate cooperation. By enabling bilateral carbon credit trading and technology transfer, it supports both countries in achieving their decarbonisation goals. The initiative strengthens India’s clean energy sector while reducing dependence on external rare earth supplies.

It also highlights the importance of transparent carbon market rules and international cooperation in the context of the Paris Agreement. With global climate finance negotiations often stalled, JCM Article 6.2 provides a practical model for developing countries to attract investment and advance sustainable development.

By focusing on JCM Article 6.2, India-Japan cooperation on carbon credits, and the implementation of bilateral carbon trading schemes, students can grasp both the policy and strategic dimensions of this agreement.