Finance Minister Nirmala Sitharaman said the Carbon Border Adjustment Mechanism or CBAM is unilateral and arbitrary and will hurt India’s exports after its implementation by the European Union. CBAM are tariffs that will apply on energy-intensive goods imported into the European Union (EU). The EU has decided to impose carbon tax CBAM from January 1, 2026, on seven carbon-intensive sectors, including steel, cement, and fertiliser. Engineering goods also will come under the purview of this import duty.
Such moves are going to create a trade barrier, she said while speaking at the Energy Transition Summit.
India has voiced its concern several times to the EU, and the government is also looking at ways to reduce the cost of transactions.
The decision by the EU may affect the profitability of Indian exporters, as Europe is among the top export destinations for the country. India’s total trade with the EU was $137.41 billion in 2023-24, with imports at $61.48 billion and exports at $75.93 billion.
On the energy transition topic, the FM said that Prime Minister Narendra Modi has led from the front in setting the agenda for the country, and the commitments given in the UN climate change conference COP 21 were fulfilled by India well ahead of time, with its own resources.
On the decarbonisation of India’s economy, she said the government has brought in the PLI (production-linked incentive) scheme for 13 sunrise sectors, which included green energy.
Speaking about the ‘PM Surya Ghar Muft Bijli Yojana’, the minister said the scheme has been provided budgetary support and received an overwhelming response from the citizens.
Two million applications have come since its launch, and the target is 10 million, FM added.
