India has refused to agree to a European Union proposal for higher levies on its carbon-emitting industries, which the 27-nation bloc would compensate for when the products enter its borders, a senior Indian official told Reuters. Reuters.
The latest proposal was put forward by an EU delegation led by Gerassimos Thomas, Director General for Taxation and Customs within the European Commission, who defended the proposed Carbon Border Adjustment Mechanism (CBAM) in his meetings with Indian officials.
Ajay Seth, India's economic affairs minister, said in an interview with the news agency Reuters, “Their suggestions are not practical. Their team has come and met us… the solutions they are proposing are not effective for a developing economy like India.”
New Delhi conveyed its position to the EU delegation, stating that the proposed CBAM was unfair and detrimental to domestic market costs, Seth said.
The EU last year approved the world's first plan to impose tariffs on imports of high-carbon goods, including steel, aluminum and cement, aiming to achieve net zero greenhouse gas emissions by 2050.
Negotiations between the EU and India are continuing at a “technical level,” an EU statement said after the delegation’s visit earlier this month.
EU officials are trying to win support from countries such as China, South Africa and India that have opposed CBAM.
The European Commission delegation has told India that the main objective of the carbon tax is not to raise revenue, but to ensure the supply of more environmentally friendly goods to the EU market.
The EU delegation said India could introduce its own carbon tax to fund improvements in supply chains and cut carbon emissions, while maintaining its share in the EU market.
Seth said creating an environmentally friendly steel industry would come at a higher cost to the economy, and “with income levels that are one-twentieth of those in Europe, can we afford higher prices? No, we can't.”
Assuming there are no domestic plans in India to impose high-carbon production taxes and incentivize lower-carbon production methods, the EU plans to impose a carbon tax on steel and aluminum shipments starting Jan. 1, 2026, with potential tariffs between 20 percent and 35 percent, according to industry estimates.
Analysts warn that the impasse over carbon emissions could strain bilateral trade and impact discussions on a free trade agreement. (uh/ab)
