India-EU FTA must address impact of carbon tax, suggests Jairam Ramesh

Congress leader Jairam Ramesh on Thursday suggested that the impending India-EU FTA, which is expected to be signed soon, must account for what he termed as "unacceptable non-tariff barrier", referring to the European Union's CBAM (Carbon Border Adjustment Mechanism) that is implemented fully from 2026.

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Effective today, CBAM is a climate policy tool introduced by the European Union, designed to put a "fair price" on carbon emissions embedded in imported goods and prevent "carbon leakage."

The CBAM will have to be paid by Indian exporters on select goods, even as the central government is actively engaging with the EU for a comprehensive trade deal.

In 2024-25, India's exports of steel and aluminium (the items likely hardest hit by the CBAM) to the EU averaged USD 5.8 billion. It had fallen from USD 7 billion in the previous year, Jairam Ramesh wrote on X.