India’s Finance Minister, Nirmala Sitharaman, voiced strong opposition to the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), labelling it as unilateral and arbitrary, which she warned could harm India’s export sectors. The carbon tax, set to be implemented from January 1, 2026, will impose tariffs on energy-intensive goods imported into the EU, including steel, cement, fertiliser, and engineering products.
Sitharaman raised concerns over this border tax at the Energy Transition Summit organised by the Financial Times, stating that such measures will make trade barriers. She emphasized that India has expressed its disapproval of the CBAM on multiple occasions and is exploring ways to mitigate the impact of transaction costs on Indian exporters.
The European Union is one of India’s key trading partners, with total trade between the two regions amounting to $137.41 billion in 2023-24, of which $75.93 billion were exports. The introduction of the CBAM is expected to affect the profitability of Indian exporters, particularly in carbon-intensive sectors.
However, Sitharaman reassured that India’s opposition to the carbon tax is unlikely to hinder the ongoing negotiations for a Free Trade Agreement (FTA) with the EU. “I am sure it won’t be escalated to the level of hurting the (FTA) talks,” she said.
Despite the challenges posed by the CBAM, Sitharaman affirmed India’s dedication to achieving net-zero emissions by 2070, with major progress towards the 2030 carbon emission reduction goals. She highlighted the substantial budget allocation for battery storage in the latest Union Budget and noted India’s success in meeting commitments made at the UN Climate Change Conference (COP 21) ahead of schedule.
Additionally, Sitharaman mentioned the government’s focus on decarbonising the economy, referencing the Production Linked Incentive (PLI) scheme for 13 sectors, including green energy and electric vehicles. She underscored that budgetary constraints have not hampered the promotion of green sectors.
Addressing India’s green initiatives, the Finance Minister discussed the overwhelming response to the ‘PM Surya Ghar Muft Bijli Yojana,’ a scheme that has garnered over two million applications since its launch, with a target of 10 million.
MOST POPULAR | India’s Industry Captain Ratan Tata Passes Away
