According to sources familiar with the matter, India is seeking direct engagement with the European Union to negotiate exemptions for its proposed carbon tax, bypassing the need to resolve the issue through the World Trade Organization.
Carbon pricing
India, a significant exporter of steel and aluminium, is seeking exemptions from the Carbon Border Adjustment Mechanism (CBAM) imposed by the European Union (EU). The CBAM aims to tax imports from countries that do not have similar carbon pricing measures as Europe. India has submitted a discussion paper to the World Trade Organization (WTO) addressing the impact of environmental regulations on trade. However, India is hoping for direct negotiations with the EU to quickly resolve the CBAM issue. The EU’s levies aim to prevent carbon leakage, where companies relocate carbon-intensive production to countries with less strict climate policies. The CBAM will have a three-year reporting period starting from October 1, 2023, with financial adjustments starting in 2026.
Free-trade agreement
India is advocating for a waiver for its small and medium-sized enterprises (SMEs) as part of the ongoing free-trade agreement negotiations with the European Union (EU). They seek a similar exemption to what some domestic companies in the EU had under the Emissions Trading System, which the Carbon Border Adjustment Mechanism (CBAM) will replace. India is also exploring the possibility of implementing a domestic mechanism similar to CBAM and evaluating its impact on import costs. The Indian Steel Association expressed concerns about CBAM being a trade barrier and emphasized the need for a level playing field for the Indian steel sector, which exports a substantial amount of steel to the EU. The Indian Trade Ministry did not provide a response to the matter. India’s Chief Economic Adviser, V Anantha Nageswaran, criticized the EU’s carbon tax, stating that it contradicts the principle of “common but differentiated responsibilities” outlined in the Paris Agreement.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: Cosco Shipping
