India’s green blueprint grows challenges and opportunities

India is uniquely positioned in climate and ecosystems. The Indian State of Forests Report 2023 reveals that forest and tree cover have expanded in recent years to about 25.17% of India’s land mass. However, non-forest areas have increased by almost 1,200 square kilometres. Degradation of the country’s forests results in the loss of rich biodiversity. It also hinders India’s ambition to meet its 2021 Nationally Determined Contributions goals under the 2015 Paris COP21 accord. These statistics reaffirm the need for a robust afforestation, reforestation and revegetation (ARR) project framework.

ARR is an environmental imperative to counter the threat of biodiversity loss and increased carbon emissions and to uphold India’s climate goals. Afforestation is the transformation of areas without prior tree cover into forest lands; reforestation involves restoring degraded forested lands, and revegetation adds tree cover in non-forest areas such as plantations.

The 2025 budget gave the Ministry of Environment, Forest and Climate Change a 9% increase in funding. ARR initiatives are major methods of achieving India’s climate goals and the impetus for increasing ARR projects stems from specific climate targets. India is committed to carbon sequestration, effectively a way of capturing and storing environmental carbon dioxide. The aim is to reduce carbon emissions by 2.5 billion to 3 billion tonnes by 2030.

At present, 29.7% of India’s land area is degraded and about 40% of its forests are either degraded or fragmented. The government is committed to reversing this land and biodiversity loss. As well as overarching legislation such as the Indian Forestry Act, 1927, the National Forest Policy, 1988 and the Forest Conservation Act, 1980, or Van (Sanrakshan Evam Samvardhan Adhiniyam, 1980), such specific policies as the National Green Mission and the National Afforestation Programme, 2002 will push ARR efforts forward and promote climate resilience.

Private entities are encouraged in their ARR efforts through direct and ancillary regulatory mechanisms such as the compensatory afforestation scheme and the Green Credit Rules, 2023. Under the Forest (Conservation) Act, 1980, anyone using reserved forest for infrastructure development or for purposes not explicitly exempted under the act must undertake equivalent afforestation to compensate.

The Green Credit Rules, 2023, introduced under the Environment (Protection) Act, 1986, consolidate a number of environmentally-friendly activities, including tree planting, into a way of generating green credits. These enable private enterprises looking to meet their environmental, social and governance numbers.

These provisions help bring India’s blueprint for a greener nation to life. However, there are gaps in a number of existing legal and regulatory gaps provisions. Land-based ARR projects generating carbon credits are treated as benefits arising from the use of land and transfers of interests in immovable property. Without appropriate forward considerations, areas such as grazing lands and agricultural, forest, community, tribal, religious and panchayat lands are often used for ARR. Not only can transactions with carbon consequences be confused with a transfer of interest in the underlying land, but they may also lead to legal disputes about access to specific land.

Under the accredited compensatory afforestation scheme, anyone can undertake advance afforestation in a non-forest area and earn carbon credits in lieu of ARR on land that may be common property. This raises the question as to the extent carbon credits are marketable or bankable. At the same time, carbon credits can be purchased in advance for ARR projects under the Foreign Exchange Management Act, 1999. However, the act allows 12 months to realise project proceeds, but ARR may span decades. This may lead to compliance irregularities.

Foreign direct investment (FDI) is another problem. Most ARRs depend on FDI to meet large-scale demand for agriculture and forestry. Such projects have to be routed through complex legal models such as contract farming, non-farm forestry or carbon financing.

ARR, as the spearhead of meeting India’s climate goals, is at the initial stage. A well-thought-out legal structure is required for ARR projects to succeed, particularly when FDI is involved.

Harvinder Singh and Avinash Kumar Khard are partners at DSK Legal. Yashaswini Basu, an associate, also contributed to the article