{"id":57105,"date":"2025-10-17T21:17:40","date_gmt":"2025-10-17T15:47:40","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=57105"},"modified":"2025-10-22T10:25:34","modified_gmt":"2025-10-22T04:55:34","slug":"india-highest-cbam-levy-eu","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/17-10-2025\/india-highest-cbam-levy-eu","title":{"rendered":"India Faces Highest CBAM Levy Among EU Trade Partners"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy, GS3\/ Environment<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>According to European think-tank Sandberg, Indian iron and steel exporters face the highest <strong>Carbon Border Adjustment Mechanism (CBAM)<\/strong> fees to the EU, estimated at <strong>\u20ac301 million.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Carbon Border Adjustment Mechanism (CBAM)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>CBAM is the European Union&#8217;s tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.<\/li>\n\n\n\n<li>CBAM is one of the elements of the <strong>EU Green Deal,<\/strong> the goal of which is to reduce <strong>GHG emissions by 55% by 2030.&nbsp;<\/strong><\/li>\n\n\n\n<li>CBAM is aimed at <strong>equalizing the price of carbon paid for EU<\/strong> products operating under the EU Emissions Trading System (ETS) and imported goods.\n<ul class=\"wp-block-list\">\n<li>It refers to a phenomenon where a<strong> EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies.<\/strong> Its primary objective is to avert<strong> \u2018carbon leakage\u2019<\/strong>.&nbsp;<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Implementation of CBAM<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The CBAM system is expected to come into force on <strong>January 1, 2026.&nbsp;<\/strong><\/li>\n\n\n\n<li>The CBAM will initially apply to imports of <strong>Cement, Iron and steel, Aluminium, and Electricity,<\/strong> as these sectors have a high risk of carbon leakage and high carbon emissions.<\/li>\n\n\n\n<li>EU importers will have to<strong> buy carbon certificates corresponding to the carbon price<\/strong> that would have been paid in the EU, if the goods had been produced locally.<\/li>\n\n\n\n<li>The price of the certificates would be calculated according to the <strong>auction prices in the EU carbon credit market.&nbsp;<\/strong><\/li>\n\n\n\n<li>Once a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, the <strong>corresponding cost can be fully deducted for the EU importer.<\/strong><\/li>\n\n\n\n<li><strong>CBAM will apply on: <\/strong>In principle, imports of goods from <strong>all non-EU countries<\/strong> will be covered by the CBAM. Certain third countries who participate in the ETS or have an emission trading system linked to the Union&#8217;s will be excluded from the mechanism. This is the case for members of the <strong>European Economic Area and Switzerland.<\/strong><\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"cedad7\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"721\" height=\"333\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Implementation-of-CBAM.webp\" alt=\"Implementation of CBAM\" class=\"not-transparent wp-image-57126\" style=\"--dominant-color: #cedad7; width:453px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Implementation-of-CBAM.webp 721w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/Implementation-of-CBAM-300x139.webp 300w\" sizes=\"auto, (max-width: 721px) 100vw, 721px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>Reasons India Faces the Highest Levy<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>High Export Volume to the EU:<\/strong> EU imports of Indian iron and steel were about US$4.25 billion in 2024.\n<ul class=\"wp-block-list\">\n<li>Larger export volumes naturally lead to higher total CBAM charges, even if per-tonne emissions are comparable to other countries.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Higher Emissions Intensity:<\/strong>&nbsp; Indian steel production emits roughly 2.6 tCO\u2082 per tonne of steel, compared with the global average of ~1.9\u20132.0 tCO\u2082 per tonne.<\/li>\n\n\n\n<li><strong>Production Technology and Fuel Mix: <\/strong>Most Indian steel is produced using <strong>blast furnaces\u2013basic oxygen furnace (BF-BOF) <\/strong>and <strong>coal-based direct reduced iron (DRI) <\/strong>methods.\n<ul class=\"wp-block-list\">\n<li>Heavy reliance on coal and metallurgical coke increases CO\u2082 intensity compared with EAF or green-hydrogen-based routes used in the EU.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Stand on CBAM<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The&nbsp; CBAM undermines India&#8217;s exports, especially in energy-intensive industries, and complicates FTA negotiations with the EU.<\/li>\n\n\n\n<li>India views CBAM as a <strong>\u201cnon-tariff barrier\u201d<\/strong> that discriminates against developing countries.\n<ul class=\"wp-block-list\">\n<li>It argues that developed nations, being historic emitters, must shoulder greater responsibility in combating climate change.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Preparedness and Mitigation Strategies<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Domestic Carbon Trading:<\/strong> India is developing a carbon credit trading system that could help offset CBAM liabilities by showing domestic carbon pricing compliance.<\/li>\n\n\n\n<li><strong>Renewable Energy Goals:<\/strong> India aims to triple renewable capacity by <strong>2030 <\/strong>and achieve net-zero emissions by<strong> 2070.<\/strong><\/li>\n\n\n\n<li><strong>Technological Transition: <\/strong>The Sandberg analysis suggests Indian firms could reduce net CBAM costs by<strong> \u20ac180 million<\/strong> if they shift to cleaner production technologies, potentially increasing revenues by <strong>\u20ac510 million.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concluding remarks<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The EU\u2019s CBAM represents both a challenge and an opportunity for India. While it risks adding costs to carbon-intensive exports, it also serves as a wake-up call to accelerate domestic decarbonization and carbon market reforms.&nbsp;<\/li>\n\n\n\n<li>A balanced policy, combining green innovation, strategic diplomacy, and domestic carbon pricing, can help India protect trade interests while advancing its climate commitments.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/cities\/Delhi\/indian-iron-and-steel-exporters-face-highest-cbam-levy-among-eu-trade-partners\/article70171279.ece#:~:text=Indian%20exp\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">According to European think-tank Sandberg, Indian iron and steel exporters face the highest Carbon Border Adjustment Mechanism (CBAM) fees to the EU, estimated at \u20ac301 million.<\/li>\n<p><\/p>\n<p><strong>Carbon Border Adjustment Mechanism (CBAM)<\/strong><\/p>\n<li class=\"ms-5\">CBAM is the European Union&#8217;s tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.<\/li>\n<li class=\"ms-5\">CBAM is one of the elements of the EU Green Deal, the goal of which is to reduce GHG emissions by 55% by 2030.\u00a0<\/li>\n<li class=\"ms-5\">CBAM is aimed at equalizing the price of carbon paid for EU products operating under the EU Emissions Trading System (ETS) and imported goods.<\/li>\n<li class=\"ms-5\">It refers to a phenomenon where a EU manufacturer moves carbon-intensive production to countries outside the region with less stringent climate policies. Its primary objective is to avert \u2018carbon leakage\u2019.\u00a0<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/17-10-2025\/india-highest-cbam-levy-eu\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":57180,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-57105","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/india-highest-cbam-levy-eu.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57105","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=57105"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57105\/revisions"}],"predecessor-version":[{"id":57128,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/57105\/revisions\/57128"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/57180"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=57105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=57105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=57105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}