<p>New Delhi: New challenges are emerging for the Indian exporters as the European Union plans to widen the scope of carbon tax with inclusion of 180 new steel and aluminium-based products from January 2028. </p><p>The European Parliament’s Committee on the Environment, Climate and Food Safety has recommended to the EU parliament for expanding the scope of Carbon Border Adjustment Mechanism (CBAM), which came into effect from the beginning of the 2026 calendar year.</p><p>The committee has proposed five major changes to the CBAM regime. Apart from widening the scope it has also recommended for tightening carbon accounting rules for scrap-based production; rejecting the use of international carbon credits for CBAM compliance; examining expansion of CBAM to indirect emissions from electricity use across more sectors; and introducing stricter anti-circumvention, reporting and verification requirements for suspected misuse.</p><p>“Together, these steps would turn CBAM from a tax mainly on steel and aluminium raw materials into a much wider carbon tax covering manufactured industrial goods,” said Global Trade Research Initiative (GTRI) founder Ajay Srivastava.</p>.Carbon tax remains intact in India-EU FTA; technical talks to address concerns: German official.<p>CBAM is the EU’s border carbon tax that charges importers for emissions embedded in goods produced outside Europe. It effectively places a carbon price on foreign manufacturers selling into the EU. The mechanism acts as a climate-linked trade barrier on carbon-intensive imports.</p><p>At present, CBAM applies to imports of iron and steel, aluminium, cement, fertilisers, hydrogen, electricity, and selected steel/aluminium products.</p><p>The proposed changes would impact a host of Indian exporters operating in the sectors like engineering goods, auto components, fabricated metal products, machinery, aluminium manufacturers, and other industrial goods.</p><p>According to GTRI, by 2030, most industrial products entering the EU could potentially face some form of carbon tax exposure.</p><p>The development comes at a sensitive time as India and EU are in the process to operationalise the free trade agreement (FTA), which was announced in January this year.</p><p>“Under the FTA, EU products may gradually enter India at zero tariffs, while an increasing share of Indian industrial exports could face CBAM charges in Europe. India has limited ability to retaliate because of the limiting CBAM-related provisions in the FTA text,” GTRI said in a note.</p><p>“Indian exporters selling into Europe may therefore need to accelerate emissions accounting, supply-chain traceability, and decarbonisation investments to remain competitive in one of India’s most important export markets,” it said. </p>
<p>New Delhi: New challenges are emerging for the Indian exporters as the European Union plans to widen the scope of carbon tax with inclusion of 180 new steel and aluminium-based products from January 2028. </p><p>The European Parliament’s Committee on the Environment, Climate and Food Safety has recommended to the EU parliament for expanding the scope of Carbon Border Adjustment Mechanism (CBAM), which came into effect from the beginning of the 2026 calendar year.</p><p>The committee has proposed five major changes to the CBAM regime. Apart from widening the scope it has also recommended for tightening carbon accounting rules for scrap-based production; rejecting the use of international carbon credits for CBAM compliance; examining expansion of CBAM to indirect emissions from electricity use across more sectors; and introducing stricter anti-circumvention, reporting and verification requirements for suspected misuse.</p><p>“Together, these steps would turn CBAM from a tax mainly on steel and aluminium raw materials into a much wider carbon tax covering manufactured industrial goods,” said Global Trade Research Initiative (GTRI) founder Ajay Srivastava.</p>.Carbon tax remains intact in India-EU FTA; technical talks to address concerns: German official.<p>CBAM is the EU’s border carbon tax that charges importers for emissions embedded in goods produced outside Europe. It effectively places a carbon price on foreign manufacturers selling into the EU. The mechanism acts as a climate-linked trade barrier on carbon-intensive imports.</p><p>At present, CBAM applies to imports of iron and steel, aluminium, cement, fertilisers, hydrogen, electricity, and selected steel/aluminium products.</p><p>The proposed changes would impact a host of Indian exporters operating in the sectors like engineering goods, auto components, fabricated metal products, machinery, aluminium manufacturers, and other industrial goods.</p><p>According to GTRI, by 2030, most industrial products entering the EU could potentially face some form of carbon tax exposure.</p><p>The development comes at a sensitive time as India and EU are in the process to operationalise the free trade agreement (FTA), which was announced in January this year.</p><p>“Under the FTA, EU products may gradually enter India at zero tariffs, while an increasing share of Indian industrial exports could face CBAM charges in Europe. India has limited ability to retaliate because of the limiting CBAM-related provisions in the FTA text,” GTRI said in a note.</p><p>“Indian exporters selling into Europe may therefore need to accelerate emissions accounting, supply-chain traceability, and decarbonisation investments to remain competitive in one of India’s most important export markets,” it said. </p>