New Delhi
Finance Minister Nirmala Sitharaman stated on Wednesday that the Carbon Border Adjustment Mechanism (CBAM) will harm India’s exports after the European Union (EU) implements it. CBAM will impose tariffs on energy-intensive goods imported into the EU. The carbon tax will be enforced from January 1, 2026, targeting seven carbon-intensive sectors, including steel, cement, and fertilizer. Engineering goods will also be affected by this import duty.
Sitharaman expressed concern that this border tax will create trade barriers. India has raised its concerns to the EU and is exploring ways to reduce transaction costs. The EU’s decision may impact the profitability of Indian exporters, as Europe is a major export destination. India’s total trade with the EU was $137.41 billion in 2023-24, with imports at $61.48 billion and exports at $75.93 billion.
Despite these concerns, Sitharaman indicated that opposition to the CBAM is not expected to hinder the Free Trade Agreement (FTA) negotiations with the EU. Confidence was expressed that India would achieve net-zero emissions by 2070, and progress toward the 2030 carbon reduction goals was affirmed. The budget has been allocated to support battery storage. The minister noted that the ‘PM Surya Ghar Muft Bijli Yojana’ has received significant public interest, with two million applications submitted toward a target of ten million.
