Advance preparation by exporters, govt must comply with EU's carbon tax: GTRI
exporters have to take urgent steps like devising mechanisms for monitoring emissions data, and providing incentives for the adoption of greener technologies to deal with the European Union's carbon tax as it would impact exports of sectors like metals, a report said.
Suggesting a nine-step action plan, the report by Global Trade Research Initiative (GTRI) said that Indian firms have less than 40 days to prepare for the CBAM (carbon border adjustment mechanism) transition.
The CBAM or carbon tax (a kind of import duty) will come into effect from January 1, 2026, but from October 1 this year, domestic companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, will have to share data with regard to carbon emissions with the EU.
«The CBAM tax will start from January 2026, but there are penalties on not reporting, negligent reporting or mis-reporting of data from October 1, 2023, onwards,» GTRI co-founder Ajay Srivastava said.
He said that the transition period for the tax, starting October 1, brings extensive data compliance requirements for Indian exporters.
The GTRI suggestions assume significance as the EU on August 17 notified compliance requirements for the CBAM transition period, which starts from October 1 this year.
«The CBAM documents exceed 800 pages of complex legal, technical texts, necessitating thorough understanding by the government and industry,» he added.
The CBAM will translate into a 20-35 per cent tax on select imports into the EU starting January 1, 2026.
India's 26.6 per cent of exports of iron ore pellets, iron, steel, and aluminium products go to the EU. These products will be hit by CBAM.
