Carbonatite melts derived from the mantle are enriched in CO2- and H2O-bearing fluids. This melt can metasomatize the peridotitic lithosphere and liberate a considerable amount of CO2. Experimental studies have also shown that a CO2–H2O-rich fluid can form Fe- and Mg-rich carbonate by reacting with olivine. The Sung Valley carbonatite of NE India is related to the Kerguelen plume and is characterized by rare occurrences of olivine. Our study shows that this olivine is resorbed forsterite of xenocrystic nature. This olivine bears inclusions of Fe-rich magnesite. Accessory apatite in the host carbonatite contains CO2–H2O fluid inclusions. Carbon and oxygen isotopic analyses indicate that the carbonatites are primary igneous carbonatites and are devoid of any alteration or fractionation. We envisage that the forsterite is a part of the lithospheric mantle that was reprecipitated in a carbonatite reservoir through dissolution–precipitation. Carbonation of this forsterite, during interaction between the lithospheric mantle and carbonatite melt, formed Fe-rich magnesite. CO2–H2O-rich fluid derived from the carbonatite magma and detected within accessory apatite caused this carbonation. Our study suggests that a significant amount of CO2 degassed from the mantle by carbonatitic magma can become entrapped in the lithosphere by forming Fe- and Mg-rich carbonates.