New Delhi is reportedly seeking to shield its producers from the bloc’s carbon tax
India wants to protect domestic exporters from a planned EU carbon tax by asking the bloc for concessions that will help align their respective emissions trading systems, Bloomberg reported on Tuesday, citing sources.
The new EU Carbon Border Adjustment Mechanism (CBAM) will come into effect in 2026. The tax aims to encourage producers to reduce emissions embedded in the manufacturing of carbon-intensive goods. The bloc also wants to prevent European firms from importing goods with a high carbon footprint without incurring the related cost.
The levy will target imports of steel, cement, aluminum, fertilizers, electricity, and hydrogen, as the EU aims to become a net zero emitter of greenhouse gases by 2050.
India, a leading supplier of steel to the EU, will raise the potential consequences of the tax on domestic industries during negotiations next month, Bloomberg wrote, citing people familiar with the matter. The bloc accounts for up to 27% of India’s steel exports, the cost of which could rise by up to a third, according to some estimates.
Carbon emission trading is a scheme that is operated or under development in the EU, the US, and other leading economies. It is designed to limit the release of greenhouse gases such as carbon dioxide by capping emissions and then allocating permits to emitter industries.
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India’s government plans to raise several proposals with the EU, such as a tax exemption for small- and medium-sized enterprises. It will also suggest that credits generated by a local fossil fuel tax be regarded as equal to Europe’s emissions allowances, and that Brussels recognize Indian-accredited energy auditors, according to Bloomberg.
India has committed to cutting its greenhouse emissions-to-GDP ratio by 2030 to 45% of its 2005 level, and to net zero by 2070.
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