Carbon Tax

During week-long India-EU FTA negotiations, New Delhi pressed for predictable implementation of the EU's carbon tax and proposed steel regulation to ensure balanced trade terms

The European Union will launch its first import tax on steel, cement, aluminium and more to reduce emissions and prevent companies from shifting production abroad

Today's Opinion page looks at India's ambitious carbon trading policy, as well as the EFTA deal. Our columnists ponder what can be done to get Indian HNIs to invest and stay in the country

With just 100 days left for the European Union to impose a carbon tax on several products, including metals, the government and the Indian exporters both have not yet taken significant steps to address this barrier, think tank GTRI said on Sunday. Indian exporters of steel and aluminum are staring at a fresh cost shock as the European Union (EU) begins collecting its Carbon Border Adjustment Mechanism (CBAM) levy from January 1, 2026. The CBAM Regulation notified in May 2023, will initially cover iron and steel, aluminum, cement, electricity, hydrogen, and fertilisers. Over the next few years, the EU plans to extend CBAM to cover all major industrial products. It is designed to equalise carbon costs between EU-made and imported goods. From January 2026, the EU will charge a carbon tariff on selected imports, using the EU Emissions Trading System (ETS) price and adjusting for any carbon price already paid in the exporting country. "Despite having a two-year transition period since

External Affairs Minister S Jaishankar raises strong objections to the EU's CBAM policy, citing unfair global standard-setting and implications for developing economies

"More stringent targets, combined with fair carbon pricing, are urgently needed to safeguard Indian industry's competitiveness while still fulfilling our climate commitments"

The India-UK free trade agreement has no provision to counter Britain's proposed carbon tax, but amid uncertainty and absence of UK legislation, New Delhi has preserved its right to retaliate or rebalance concessions, if future measures impact domestic exports, an official said. The UK government in December 2023 decided to implement its Carbon Border Adjustment Mechanism (CBAM) starting 2027. According to economic think tank GTRI, India's exports worth USD 775 million to the UK may be impacted due to Britain's decision to introduce carbon tax on products such as iron and steel, aluminium, fertiliser and cement, from 2027. The official said that the free trade agreement (FTA) with the UK has no provisions to counter CBAM, which has the potential to nullify the concessions offered by Britain to India. "Because of current uncertainty and no legislation in place, there is an understanding that India will/ has preserved its right to retaliate or rebalance the concessions (in future),"

India will impose retaliatory duties if the European Union goes ahead with its plan to levy a carbon tax on Indian products, Commerce and Industry Minister Piyush Goyal said on Tuesday. Under the EU's Carbon Border Adjustment Mechanism (CBAM), Indian exports of steel, aluminum, and cement to the EU could face tariffs of 20-35 per cent. He said that gradually the talks about climate is dwindling and termed the CBAM as "very very irrational regulations". The minister asserted that the developed countries should share technologies and and finances to developing and least developing nations to deal with the issues related to climate change. "If they will put in carbon tax, and now there is a big if for obvious reasons. If they do put it in, we will retaliate. They will put it on products which really will hurt their own economy and the retaliation will further hurt their economy," Goyal said here at an function. "I think it will be very silly particularly to put tax on friendly countr

India and 62 other countries on Friday voted in favour of the world's first-ever global carbon tax imposed on the shipping industry by the United Nations' shipping agency. The decision, taken at the International Maritime Organisation (IMO) headquarters in London after a week of intense negotiations, aims to reduce greenhouse gas emissions from ships and promote cleaner technologies. The move marks the first time a global carbon tax has been imposed on an entire industry. Starting 2028, ships will either have to shift to lower-emission fuels or pay a fee for the pollution they generate. The tax could generate up to USD 40 billion by 2030. However, all the funds will be used exclusively to cut emissions in the shipping industry and not for supporting climate action in developing countries. Despite this breakthrough in global climate policy, carbon pricing is expected to reduce shipping emissions by only 10 per cent by 2030, far short of the IMO's own target of at least 20 per cent.

The WTO does not have any specific agreement on environment. However, Article XX of the General Agreement on Tariffs and Trade (GATT) allows exceptions to free trade with adequate safeguards

Calls some of India's concerns on carbon tax 'illegitimate'

The European Union's (EU) non-trade measures - carbon tax and deforestation regulation - are expected to impact Indian exporters, Economic Survey 2024-25 said on Friday. It said globally, non-tariff measures such as subsidies and export-related measures, have risen in aid of nations' industrial policy goals. Unlike broad-based tariffs, these non-tariff measures tend to be granular in their approach. They are often less visible, making them harder to assess. In the future, the imposition of climate-change-related NTMs by the EU in the form of the Carbon Border Adjustment Mechanism (CBAM) and European Union Deforestation Regulation (EUDR) is anticipated to have broad implications for exporters in emerging economies such as China, India, and Turkey," the survey said. Implemented by the EU and under consideration by the UK, CBAM aims to align the cost of carbon emissions for imported goods with that of domestically produced products. Under the mechanism, importers will buy carbon ...

Finance Minister Nirmala Sitharaman will present the federal budget for the 2025-26 fiscal year on February 1

The logistics infrastructure will include developing port infrastructure across AM Green Net-Zero Industrial Clusters to facilitate global exports

India will have to prepare itself in future to deal with issues like non-tariff and unilateral duty-related barriers like the EU carbon tax, a senior government official said on Wednesday. Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi said that countries like the US and the European Union (EU) are trying to boost their domestic manufacturing through such measures. "So the US has been trying to boost its domestic manufacturing through the Inflation Reduction Act and CHIPS Act, the EU is trying to do it through CBAM (Carbon Border Adjustment Mechanism)...deforestation regulation is another mechanism of putting non-tariff barriers on goods coming from developing economies. "So both the combination of non-tariff measures as well as potential tariff measures in clear violation of WTO (World Trade Organisation) commitments is something which India has to brace up in future to deal with," Sarangi said. He was speaking at CII's export competitiveness conclave. Asked about

The climate change is no more an esoteric concept. There is unlikely to be any dilution in emerging international regulations

The tax, or CBAM, is to be imposed by EU in 2026 on products whose manufacturing processes do not follow certain emission standards

This agreement enables climate action by increasing demand for carbon credits and ensures that the international carbon market operates with integrity under UN supervision

Delays in setting up a carbon market in India have become a pressing concern now, especially after a UN body warned this week of the perils of going slow on emission reductions

BCG discusses decarbonisation, impact from West Asia tensions and the geo-political concerns and preparedness of Indian and global corporates