Indian cement firms most exposed to CBAM risk: World Economic Forum

The study, which examines corporate readiness in Brazil, China, India and South Africa for CBAM, finds no evidence so far of broad competitiveness losses for exporters from these economies

Carbon-intensive companies in India are beginning to adapt to the European Union’s (EU’s) impending Carbon Border Adjustment Mechanism (CBAM), which puts restrictions on the entry of products with a high polluting capacity, even as sectors such as cement face some of the highest exposure once the levy enters its definitive phase on January 1 next year, according to a report by Climate Finance Asia and the World Economic Forum.

 

The report flags cement as the most vulnerable. Its export from India carries a carbon-payment intensity of about 65 per cent per dollar of EU production or import, higher than Brazil’s and close to China’s and South Africa’s.

 

Around 11.5 per cent of India’s cement export goes to the EU, creating direct exposure once CBAM pricing becomes operational.

 

The study, which examines corporate readiness in Brazil, China, India, and South Africa for the CBAM, finds no evidence so far of broad competitiveness losses for exporters from these economies.

 

It notes that firms in these economies are investing in low-carbon technologies, giving them a first-mover advantage.

 

“A first mover advantage is emerging for companies that act now. These leading corporations are leveraging early investments in low-carbon technologies to differentiate their products, command premium pricing, and consolidate market share effectively turning regulatory pressure into a powerful tool for competition,” the report said.

 

The report notes that firms in carbon-intensive sectors such as cement, steel, oil and gas, and mining are responding through investment in low-carbon technologies, digital carbon-accounting systems, and greater supply chain transparency.

 

Many companies are also adopting internal or “shadow” carbon pricing to guide capital-expenditure decisions, signalling a shift in corporate strategy driven by carbon-linked trade rules.

 

UltraTech Cement has been cited as a flagship case study from India. The company has around a 20 per cent market share in India. It has introduced an internal carbon price of about $10 per tonne of carbon dioxide, built over 1,000 Mw of renewable energy capacity, expanded waste heat recovery systems, and issued dollar-denominated sustainability-linked bonds to fund its transition.

 

At policy level, the report highlights that India notified a national Carbon Credit Trading Scheme in 2024, with phased implementation beginning this year.

 

While domestic carbon pricing could reduce CBAM liabilities for Indian exporters, uncertainty remains over whether and how the EU will recognise India’s carbon market, raising the risk of double compliance as similar mechanisms emerge globally.

 

The study also warns of growing indirect exposure for Indian firms. Even companies that do not export directly to the EU could face pressure as multinational buyers push CBAM compliance requirements down global supply chains over the next three to five years.

 

This poses particular risks for micro, small, and medium enterprises (MSMEs), which may lack the capacity for emission measurement and reporting, potentially excluding them from global value chains.