India need not worry about EU's carbon tax: Goyal

The European Union's (EU) move to impose a carbon tax on imports, which will be effective from 2026, is a "death knell" for manufacturing in Europe, Union commerce minister Piyush Goyal said on Thursday and added, "personally, I think, we in India need not be concerned about it".

- Rajeev Jayaswal

Currently, there is a reporting requirement that kicked in last month. The carbon border adjustment mechanism tax (CBAM) will, however, start sometime in 2026, he said. Goyal was speaking at the ORF's (Observer Research Foundation) first edition of the Energy Transition Dialogue in the Capital.

CBAM is a tariff on carbon-intensive products to offset carbon leakage and it may see up to 35% tariff on imports of high-carbon goods from India. Besides, the move is against the principle of equity and is seen as a trade barrier. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place, or when EU products get replaced by more carbon-intensive imports, according to the European Commission's website. The tax, implemented in phases from October 1, will become fully effective on January 1, 2026.