The European Commission has allayed the apprehensions of Indian exporters, especially regarding reporting standards for carbon-intense goods. Notably, this gesture addresses concerns that emerged during the CBAM's initial phase, which began this October
The European Union (EU) is contemplating India's innovative proposal for the domestic collection of carbon taxes intended for certain exports to the bloc. This process is part of the Carbon Border Adjustment Mechanism (CBAM) set to commence on 1 January 2026. However, officials emphasise the need for detailed discussions before making decisions.
The European Commission has allayed the apprehensions of Indian exporters, especially regarding reporting standards for carbon-intense goods. Notably, this gesture addresses concerns that emerged during the CBAM's initial phase, which began this October.
The CBAM, introduced by the EU, aims to fairly price the carbon emissions produced while creating certain goods outside the EU. Beginning 2026, this could mean steeper import duties for such items. Though the EU already accounts for its carbon output via the Emission Trading System, items like cement, iron, steel, and aluminium could see additional levies of up to 20-35 per cent.
Indian sectors potentially facing the brunt include iron and steel and aluminium, trailed by cement. To mitigate this, India hopes to instate a robust Carbon Credit Trading System by 2026 and seeks EU endorsement to ensure most exporters comply.
Amidst these developments, exporters have until January 2024 to present their inaugural quarterly report detailing CBAM goods shipped and their corresponding carbon emissions.