Will India get a four-year breather on carbon tax?
New Delhi/Mumbai: India plans to seek a four-year delay in the start date of the European Union’s contentious carbon tax to provide more breathing space to its exporting industries, multiple people aware of the matter said. Under the EU’s carbon control regime that kicks off in 2026, emissions should be reduced 2.5% in the first year and reduced every year after that, and eliminated by 2034. There are different targets set for every year and the current plan aims to reduce emissions by 48.5% by 2030.
Collection of carbon emission data began in October. “We will engage with the EU separately on the matter and seek an extension in the carbon tax timeline to ensure that Indian companies do not lose out on that business," said a government official, one of the two people cited above. India is keen on a full waiver of the Carbon Border Adjustment Mechanism (CBAM), and a relaxed deadline is its second option.
“The Indian government wants this requirement (emission control) to be waived for India as the first option, but if this can’t happen, then the second option is to defer the 2026 timeline to 2030. Indian companies need time since it will require a lot of investment and upgrades in the ecosystem," said a second person, a top executive at a steelmaker. The EU’s carbon tax plan is in line with its aim to turn climate-neutral or net-zero by 2050.
For this, companies from seven carbon-intensive sectors—steel, cement, fertilizer, aluminium, iron, electricity, and hydrogen—will have to share data about their carbon emissions with the EU. Companies will also need to submit compliance reports every quarter. Any neglect or misreporting may trigger stiff penalties, as the EU looks to address the problem of “carbon leakage" through
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