The European Union (EU) is streamlining its Carbon Border Adjustment Mechanism (CBAM) to ease the burden on small businesses and favour Indian exporters. Set to be implemented in 2026, CBAM aims to impose tariffs on carbon-intensive goods such as steel, cement, and aluminium entering the EU market. However, the EU has introduced measures to support small enterprises and developing countries like India.
India is progressing with its own Carbon Credit Trading Scheme, which establishes a carbon price on emissions. The EU has confirmed that carbon prices already paid under India’s domestic carbon market will be deducted from CBAM charges. This ensures Indian exporters are not taxed twice and benefits key energy-intensive sectors such as fertilisers, steel, and aluminium, which are significant contributors to exports.CBAM is the EU’s framework designed to tax the carbon emissions embedded in imported goods, aiming to prevent carbon leakage and encourage greener production globally. India had previously criticised CBAM as a potential trade barrier and sought a transition period for adjustment.
The EU and India are also exploring opportunities for cooperation in developing a domestic carbon market, which could help both nations reduce emissions and fund the clean energy transition. The EU is prepared to share insights from its Emissions Trading Scheme, particularly in areas such as monitoring, reporting, verification, and sectoral benchmarks.(Edited by : Ajay Vaishnav)
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