India likely to flag proposed carbon border tax during European Commission president's visit

NEW DELHI: India during the visit of European Commission president Ursula von der Leyen and EU college of commissioners to the country from Feb 27-28 is expected to flag its concerns over the proposed carbon border tax and oppose any kind of unilateral trade barrier in the context of the Carbon Border Adjustment Mechanism (CBAM).
The EU’s CBAM, which is to be implemented from next year, is a tool to put a price through imposing border tax on carbon intensive goods, like iron & steel, aluminium and cement, that are entering the 27 European Union nations. It will put a tariff burden on such products of developing countries, including India, and impact their trade.
Sources privy to India’s list on discussion point said that the carbon border tax issue will be raised during the second ministerial meeting of the India-EU Trade and Technology Council and bilateral ministerial meetings between the European commissioners and their Indian counterparts.
“The matter relating to concerns over any kind of unilateral trade barrier may also be discussed during delegation level talks between Prime Minister Narendra Modi and European Commission president Leyen,” said an official. Though it will be Leyen’s third visit to India, this will be the first ever visit of the EU college of commissioners together to the country.
India has been opposed to CBAM ever since it was conceived, arguing that the initiative will place an additional burden on businesses in developing economies due to embedded emissions in their products. It also argued that micro, small and medium sized businesses (MSMEs) including those in the steel and aluminium sectors will be particularly impacted.
Though some larger Indian companies are already developing low-carbon manufacturing techniques which will reduce their exposure to the CBAM levy, it will take time for them to be competitive in the EU market.