On carbon tax, not all steelmakers are on the same page
New Delhi/Mumbai: Europe’s proposed carbon tax has split the Indian steel industry down the middle, with some companies in favour and others against, even as lobbying to waive or delay the levy continues. The tax, under the carbon border adjustment mechanism (CBAM), would increase costs for Indian steelmakers exporting to Europe, a key destination that is critical for their businesses. The tax has been supported by companies with major operations in Europe, such as Tata Steel.
On the other hand, steelmakers with large-scale operations in India, such as JSW Steel, the country’s biggest, feel the levy is a trade barrier. Tata Steel, Asia’s oldest steelmaker, has sizeable operations in the UK and the Netherlands, and considers the levy vital for keeping steel manufacturing viable in Europe. “In Europe, we are already subject to a carbon tax of €80 per tonne," T.V.
Narendran, the company’s managing director, told Mint recently while discussing the company’s December quarter earnings. “So, it’s only logical to say that anybody else who wants to sell steel in Europe should pay the same carbon tax. Otherwise, why would anyone want to make steel in Europe?" Narendran said that steelmakers across Europe are investing heavily in cleaner manufacturing routes that will boost their costs.
“If you’re going to invest a lot of money in transitioning to a new process route like we are in Europe, you will naturally not allow cheaper steel imports," he said. ArcelorMittal Nippon Steel (AM/NS) India, which has one of its parent companies based in Europe, is also likely to favour the tax, people aware of the thinking within the company said. However, the company itself declined to comment.
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