India is concerned by the upcoming carbon tax imposition of the European Union (EU) – the Carbon Border Adjustment Mechanism (CBAM) – and is taking it up at the WTO and also bilaterally, so that exporters and producers get a fair deal, Union Commerce Minister Piyush Goyal said on Tuesday.

According to him, India would also insist on the implementation of Common But Differentiated Responsibilities (CBDR) and finance support as determined under the Paris Agreement.

“We are taking it (CBAM) up with the EU and at the WTO very, very seriously,” Goyal said during his speech at the fourth edition of the Indian Steel Association’s annual conclave here.

“India will not be accepting any unfair levies and taxes,” he said adding that India is “work(ing) and fight(ing) for a fair deal”.

The CBAM or carbon tax (a kind of import duty) will come into effect from January 1, 2026. But in the transition phase, which came into effect from October 1 this year, domestic companies across seven identified carbon-intensive sectors - like steel, cement, fertiliser, aluminium, and hydrocarbon products - have to share data regarding emissions (embedded) in the products exported to the EU.

“I will assure you that we are extremely concerned about CBAM..... We shall try to work and fight to get a fair deal for the Indian producers and exporters and nobody is complacent about CBAM,” Goyal said.

On-boarding other countries

According to the minister, apart from India, other countries have also taken a stand on this proposed carbon tax. India is also in discussions with other countries to “onboard” them on the issue and also address this “very serious concern”.

China and Japan have been among the Asian countries, apart from India, which reportedly have been quite vocal against CBAM.

“We are not scared of anything that the other countries have to throw at us. Collectively the world will have to take a view on this (CBAM) and we shall be focussing our energies to get other countries on board to address this very serious concern,” Goyal said.

Trade sources say, that while countries like China, South Korea, and even Australia have established emission trading schemes (to price carbon) most of the exporters across these countries lack broad awareness about EU rules, and there isn’t an established uniform emission accounting and reporting practice. Recently, Japan’s carbon pricing scheme kicked off on the Tokyo Stock Exchange.

They say CBAM is being viewed as a trade barrier across industry; while the EU is pitching it as an environmental measure.

“We will always find innovative solutions. But I can assure you that India will not be accepting unfair taxes or levies being put on its steel or aluminium industry or on any industry,” Goyal said.

CBDR and finance

According to Goyal, the EU would have to allow “common but differentiated responsibility” (CBDR) to India on the issue as New Delhi is a developing economy.

“We are conscious of they have to allow CBDR or provide funding or technical support that was committed at Paris before the Paris Agreement took shape...Which is yet to happen in spite of developed countries wanting in this direction. And we shall be taking up this issue,” he reiterated to the industry.

India’s 26.6 per cent of exports of iron ore pellets, iron, steel, and aluminium products go to the EU. These products would be hit by CBAM. India exported these goods worth ₹7.4 billion in 2023 to the EU.

Review of FTAs

Goyal said work is on to provide better access to the steel industry in different countries through free trade agreements (FTAs).

In order to protect domestic steel players, India is including provisions like “high value-added norms” and “melt and pour” in these agreements.

“We are looking at both the options so that our steel industry gets protected....These provisions would deter countries from misuse of FTAs (too),” he said.

Related Topics