The EU’s Carbon Border Adjustment Mechanism and EU-Deforestation Regulation (EUDR) are non-tariff barriers in the garb of climate protection measures and can potentially hit an estimated $9.5 billion of Indian exports to the bloc, the Economic Survey has said.
“..it is hard to shake off the conclusion that both CBAM and EUDR are trade protection measures garbed in the language of climate and environment. The game and the end goals are the same, but the tactics keep changing. Labour standards, gender, democracy, emissions and deforestation, the innovative list will keep evolving with time,” the Eco Survey noted.
The CBAM seeks to impose a tax on six carbon intensive products, including iron & steel, aluminium, fertilizers and cement, exported to the bloc based on carbon emitted during its production. While the reporting requirement under the mechanism began last year, the carbon taxes are to be levied from January 1 2026.
“The CBAM does not take into account the fact that countries like India are at a different level of development. We see it is a protectionist mean to protect the European industry. It serves more than just the stated goal of reducing carbon emissions,” said Chandni Raina, Advisor, Department of Economic Affairs.
Raina cited studies, including an UNCTAD report, which have said that the CBAM would have a negligible impact on global emissions reduction.
The implementation of the EUDR, which seeks to regulate the consumption of products derived from deforested land, will additionally hurt export of several agro-based products from India.
“The CBAM and EUDR are expected to affect $9.5 billion of India’s exports to the EU, which amounts to 9 per cent of India’s exports to the world or 12.9 per cent of India’s exports to the EU,” the survey said quoting a report from research body GTRI.
The share of CBAM exports in total Indian exports to the EU has increased substantially from 6.3 per cent in 2014 to 10.5 per cent in 2023,” the survey pointed out.
Quoting from UNCOMTRADE database (2024), the survey said that in 2023, India’s exports to the EU of iron and steel was at $5.55 billion, aluminium was at $1.8 billion, cement was at $8.3 million and fertilisers was at $2 million.