Archive · 22 Sep 2025
India, EU Negotiate Carbon Tax in Trade Agreement
India and the EU are discussing a trade deal and how it will affect their businesses.
A big issue is the EU's new carbon tax, which taxes some goods based on their carbon emissions.
India is worried this tax could hurt its companies that sell goods like steel and cement.
They're working to figure out the details of the tax and make sure it doesn't unfairly affect Indian companies, especially smaller ones.
The EU is trying to make it easier for small businesses too.
India and the EU are negotiating a Free Trade Agreement (FTA).
A key issue is the EU's Carbon Border Adjustment Mechanism (CBAM).
CBAM will tax certain imports based on their carbon emissions.
India is concerned about the impact of CBAM on its exports, particularly in sectors like steel and cement.
Both sides are discussing how to address these concerns within the FTA framework.
- Who
- India and the European Union (EU)
- What
- Ongoing discussions on the impact of EU's carbon tax (CBAM) on Indian industry within the India-EU FTA framework.
- When
- Ongoing negotiations
- Where
- India and the European Union (EU)
- Why
- To minimize the impact of the EU's carbon border tax (CBAM) on Indian exports.
Indian Government
European Union
Impact of CBAM
Indian Government
Concerned about the negative impact of the CBAM on Indian exports and industry, especially MSMEs.
European Union
Implementing CBAM to ensure that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU.
- Topic
- India-EU FTA negotiations
- Main Issue
- Impact of EU's Carbon Border Adjustment Mechanism (CBAM)
- CBAM Timeline
- Tax on 6 goods starting January 1, 2026
- Goods Affected
- Steel, aluminum, cement, fertilizer, hydrogen, and electricity
- Indian Concern
- Potential negative impact on Indian exports and MSMEs
- EU Action
- Simplifying regulatory norms for MSMEs
Sources
India has not significantly advanced its CBAM preparedness: GTRI
India has not significantly advanced its CBAM preparedness: GTRI
CBAM already hurting India’s exports to EU: GTRI
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