The European Union (EU) has suggested that India should introduce its own carbon tax amid a row over the EU’s Carbon Border Adjustment Mechanism (CBAM), India’s commerce and industries minister Piyush Goyal said.
- The CBAM is a ‘green tariff’ on carbon-intensive imports such as steel, cement, and power generation products entering the 27-nation bloc.
- India has previously described it as a non-tariff barrier and the issue has cropped up in talks on an India-EU free trade agreement.
- The CBAM takes effect in 2026, with reporting requirements going back to 2023.
- The Indian think tank Global Trade Research Initiative (GTRI) estimates that the measure could mean a 20-35 per cent tax on specific imports into the EU starting 1 January 2026.
- This will impact companies in seven carbon-intensive sec- tors, including steel, cement, fertilizers, aluminium and hydrocarbons.
- About 27 per cent of India’s exports of iron ore pel- lets, iron, steel, and aluminium products are destined for the EU, with exports totalling $7.4 billion in 2023.
