CBAM will impact the cement, iron and steel, aluminium, fertiliser, electricity and hydrogen sectors.
Traders only have to provide information on the emissions embedded in their imports, subject to the mechanism without paying any financial adjustment from October 1. Companies would have to seek compliance certificates from the EU authorities to comply with the CBAM norms.
However, the full implementation of CBAM is scheduled for January 2026 and the mechanism would then translate into a 20-35% tax on select imports into the EU.
“We are awaiting clarity on how certification will be done after the audit of the carbon footprint of when it comes into effect in October,” said EEPC India chairman Arun Kumar Garodia.
India’s exports to the EU in 2022-23 amounted to $74.8 billion, with mineral fuels, electrical machinery and iron and steel being the top products. In 2022, 27% of India’s exports of iron, steel and aluminium products worth $8.2 billion went to the EU.On its part, the government has insisted that India’s version of carbon credits should get internationally recognised on solar and green technology to balance out the impact of such rules. India has asked the EU to recognise its Carbon Credit Trading Scheme, pushed for mutual recognition of its carbon certificates with the EU and carve outs for the micro, small and medium enterprises (MSMEs).”Talks are on with the EU to either postpone the implementation and exclude MSMEs,” said an official, adding that Japan is also opposed to CBAM.
While CBAM has no exemptions for MSMEs, carve outs for small businesses are crucial as 40-45% of the affected companies in these sectors are MSMEs, the official said. They had exemptions in the EU’s earlier Emission Trading System.
