The Polluter Pays Principle has become one of the important elements in both domestic and International Environmental Governance. The Polluter Pays Principle was first referred to by the members of the Organisation for Economic Co-operation and Development (OECD), which defines the Polluter Pays Principle as ‘allocating costs of pollution prevention and control measures’ in 1972, and it was also referred to in principle 16 of the Rio Declaration of 1992. Even though it was not explicitly mentioned in any legislation relating to Environmental law in India, they have been constantly recognised by the Indian Supreme Court, and one such landmark case is the Indian Council for Enviro-legal  Action v Union of India  In this case, it has been held that the Polluter Pays principle establishes absolute liability of the Polluter not only to compensate the victim but also to bear the cost of restoration of environmental damages caused by him. So basically, the Polluter Pays Principle means that if any person causes pollution to the Environment, they are liable to pay damages and restore the environment. This paper examines the effectiveness of the Polluter Pays Principle in promoting sustainable development among individuals, corporations and the Government, and further assesses how the polluter pays principle acts as a regulatory tool in controlling environmental degradation and maintaining ecological balance through international instruments. This paper proposes that strong polluter liability, transparency in holding polluters liable for pollution, global cooperation, and industrial policy to regulate industries will help achieve sustainable development.