Singed by CBAM

Indian steel units stare at rising costs and market loss as Europe’s carbon tariff comes into play

- Devabrata Dutta

On a December morning in Nashik, as Ajay Vedmutha walks across the factory floor of Bedmutha Industries, he only has one question on his mind: “Are we prepared to be able to sell in Europe from next month?”

A steel- and copper-products manufacturer, Vedmutha is bracing for the impact of the European Union’s (EU’s) carbon tax. Vedmutha has spent over a decade turning his plant green. And now, even though it runs on renewable power and boasts a lower carbon footprint, he still wonders if it’s enough.

However, not everyone is even this close to being prepared.

A few hundred miles away in Raipur, Abhay Parakh, director of Jainam Ferro Alloys, is also turning his medium-sized enterprise green. It’s been a year since he started the process, but clearance paperwork has stacked taller than the production samples on his table. “The Centre wants to push it, but state governments don’t understand the urgency of the situation,” says Parakh.

These two businessmen—one prepared early and one caught in bureaucratic limbo—capture India’s dilemma as the EU's carbon border adjustment mechanism (CBAM) goes live this month.

What is CBAM?

Europe's drive to cut greenhouse gas emissions by 55% by 2030 is triggering a sweeping overhaul of its climate policies. Under the “Fit for 55” package, it is strengthening its emissions trading system (ETS) and launching CBAM.

CBAM is essentially a carbon tax the EU will charge on imported products—like steel—based on how much carbon dioxide (CO2) was emitted while making them. If a product is made in a country with higher pollution, the EU will charge extra tax at the border to “balance out” the carbon cost.