Carbon tax is a thorn. But that won't hold up free trade talks
NEW DELHI, MUMBAI : India’s free trade talks with the UK and European Union (EU) may skip the vexed carbon tax matter in an attempt to fast-track the trade deals, three people aware of the matter said. The absence of any agreement on the carbon border adjustment mechanism (CBAM) casts a cloud over Indian steel exports to the region, as it would raise the cost of exports and eat into profits. India is negotiating separate free trade agreements (FTAs) with the UK and EU.
“There is a sense of urgency in finalizing these FTAs and arriving at some consensus since the government’s term is set to end," one of the three people said on the condition of anonymity. Talks on the CBAM would be held separately by the steel and external affairs ministries with their foreign counterparts, the official added. The ministries of commerce and steel did not respond to queries sent on Monday.
The EU’s CBAM, and a similar policy of the UK, seek to levy a carbon tax on imports into the region of iron and steel, aluminium, cement, ceramics, fertilizer, glass and hydrogen from January 2026. The UK and EU say the levy aims to put a fair price on carbon emitted when these goods are produced outside the region, and protect local producers from price disadvantages. Indian steelmakers have been lobbying the government to seek concessions on CBAM as part of the ongoing FTA discussions, said two more people aware of the matter.
However, with the topic now out from the discussions, it adds uncertainty for Indian steelmakers. Queries sent to the Indian Steel Association, the leading lobby of the domestic steel industry, remained unanswered. A steel industry executive said the exclusion of CBAM from FTA negotiations could be a strategic move on India’s
. Read more on livemint.com
