Countdown to Carbon Tax: Indian Exporters Brace for EU's CBAM Impact
With the EU set to impose a carbon tax in 100 days, Indian exporters face challenges due to unpreparedness. The CBAM levy targets multiple products with implications for steel and aluminum exports. India must urgently address policy gaps and seek fair treatment under the India-EU trade pact.
- Country:
- India
The European Union is preparing to impose a carbon tax on several products, and Indian exporters find themselves unprepared as the deadline approaches in 100 days. This move by the EU is part of its Carbon Border Adjustment Mechanism (CBAM) levy, set to take effect from January 1, 2026.
Initially focused on industries like steel, aluminum, and cement, the CBAM aims to align carbon costs between EU-made and imported goods. However, Indian exporters, particularly in steel and aluminum, are at risk of facing a severe financial hit due to the absence of significant government measures to mitigate this new cost.
The Global Trade Research Initiative (GTRI) has highlighted India's lack of progress in readiness for CBAM compliance. With a decline in exports to the EU and no significant policy initiatives launched, experts urge immediate steps, including fast-tracking domestic carbon credit mechanisms and negotiating with the EU for more favorable transition terms.
(With inputs from agencies.)
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