Under the newly unveiled EU-India Strategic Agenda, the European Union will integrate India’s domestic carbon credit trading scheme into its Carbon Border Adjustment Mechanism (CBAM). This move is expected to reduce compliance costs for Indian exporters of carbon-intensive goods such as steel, cement, fertilisers and aluminium.
According to the agreement, any carbon price that Indian firms have already paid under India’s own carbon market will be deducted from the financial adjustment CBAM imposes on goods entering the EU. The measure aims to address longstanding concerns of “double taxation” and improve fairness in trade.
Brussels has also promised to simplify CBAM procedures for smaller businesses, making it easier for them to comply without facing onerous administrative burdens.
India’s Commerce Minister Piyush Goyal welcomed the move, saying it would favour exporters who have invested in decarbonisation, while also emphasising the need for a fair transition period.
The integration is part of broader efforts by both the EU and India to deepen trade ties, improve environmental cooperation, and ensure that climate-related regulations do not unfairly penalise countries with growing carbon mitigation efforts.
