EU's aggressive environmental regulations biggest hurdles of FTA talks with India

Under Carbon Border Adjustment Mechanism, Indian exports of steel, aluminum & cement to EU could face tariffs of 20-35%, even if an FTA is signed

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NEW DELHI: The European Union's (EU) aggressive environmental regulations, particularly the carbon tax, deforestation rules, and supply chain due diligence laws are one of the biggest hurdles in the negotiations for a proposed trade pact with India, economic think tank GTRI said on Sunday. It said that these regulations could impose additional costs on Indian exports.

Under the Carbon Border Adjustment Mechanism (CBAM), Indian exports of steel, aluminum, and cement to the EU could face tariffs of 20-35 per cent, even if an FTA is signed, the Global Trade Research Initiative (GTRI) said in its report. This raises concerns that while EU goods would enter India duty-free, Indian exports would still face these indirect barriers in Europe, it added.

GTRI Founder Ajay Srivastava said that India is pressing for clear exemptions or compensatory measures within the FTA to neutralize the impact of CBAM and related environmental rules.