The government will take all necessary steps to protect Indian industry from any adverse impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM) which mandates reporting of carbon emissions for certain exports to Europe from October 1, Commerce and Industry Minister Piyush Goyal assured on Wednesday.
The Minister’s remarks assume significance as the CBAM framework involves onerous reporting requirements for cement, iron and steel, aluminium, fertilisers, and electricity imports in the region, to start with, with additional import levies to be imposed on such carbon-intensive products from 2026. Experts reckon Indian steel exports to Europe, for instance, could take the biggest hit from the CBAM due to more carbon-intensive nature of production processes vis-à-vis rivals like China and South Korea.
“We are in dialogue with the EU to see what they have in mind and how initiatives like CBAM will impact Indian industry and manufacturing, and I can assure you, we are there to protect your interests and any amount of laws any country may bring out, we will ensure that it doesn’t hurt any of your businesses,” Mr. Goyal said at the annual session of the Automobile Component Manufacturers Association of India (ACMA).
Noting that the dialogue with the EU is “progressing well”, Mr. Goyal viewed the CBAM as an effort by the EU to bring sustainability to the core of the global agenda, rather than impose a barrier to trade.
“…From October you will have to start reporting, but taxes will not be payable until 2026, during which period, we are already discussing the free trade agreement [with the EU]… We will also find a smarter way to ensure that we are able to decarbonize our economy,” the Minister said, stressing that the country has committed to reduce carbon emission intensity by about 45% from 2005 levels by 2030.
“Industry and government could work together to create that ecosystem, which will decarbonize our production. Simultaneously, we are working with the steel industry also in a big way. All of this put together and possibly some policy interventions to accommodate the demands of the world today will give us a competitive edge over other countries,” Mr. Goyal averred.
“So I personally look at all these not as impediments. But I’m continuously examining to see how we can convert this so-called problem of CBAM into an advantage for Indian industry,” he underlined. The Minister also mooted the idea of setting up auto component parks using a combination of green energies as a means to cope with the CBAM.
