EU relief to India on CBAM

THE EUROPEAN UNION has agreed to adjust the carbon price paid by exporters in India from their due payments under the Carbon Border Adjustment Mechanism (CBAM) and simplify rules on the carbon tax for small business.

- FE BUREAU

This was stated in the new Strategic EU-India Agenda adopted by the 27-member bloc on Wednesday.

“A carbon price effectively paid in India will be deducted under the CBAM financial adjustment, which, being based on carbon content, will favour Indian exporters decarbonising their CBAM goods. This mechanism is also being simplified to benefit small businesses,” the EU said in a communication to the European Parliament.

Effective January, 2026, the EU will start collecting tax under CBAM which will be equal to the price of excess carbon emitted during the production stage of select products like iron and steel, aluminium, cement, electricity, hydrogen and fertilisers. The EU has prescribed a threshold of carbon emission on each product beyond which this tax will be imposed.