The EU is set to expand its Carbon Border Adjustment Mechanism (CBAM) starting January 2028. This could raise costs for Indian products exported to Europe.
The European Parliament’s Committee on the Environment has pushed for more products to fall under CBAM. After a transitional period from 2023 to 2025, the European Commission learned valuable lessons and now wants to include 180 additional items, primarily steel and aluminum-based goods.
This expansion aims to prevent emissions from simply shifting across different parts of the production process without being effectively reduced. According to a draft report, the inclusion of these products highlights concerns over carbon leakage, meaning that companies might move their operations to countries with less stringent regulations.
GTRI, a think tank, emphasizes that Indian exporters should improve their emissions tracking and invest in cleaner practices. This is crucial as Europe becomes stricter on carbon emissions.
The proposed changes include not just more construction materials but also machinery parts, aluminum containers, and various manufactured goods. As Ajay Srivastava, founder of GTRI, noted, this will broaden CBAM beyond just raw materials, affecting a range of industrial products.
Currently, CBAM targets iron, steel, aluminum, cement, and electricity. By 2028, Indian businesses exporting engineering goods and auto components may face a carbon tax, which means they need to prepare for these changes.
This reflects a global trend where countries are becoming more serious about emissions, driven by the need for climate action. Recent data shows that companies investing in sustainability can improve their competitiveness in markets increasingly driven by eco-consciousness.
As businesses navigate these new regulations, understanding and adapting will be vital for success in the evolving landscape of international trade. For more information on CBAM and its implications, you can refer to the European Commission.
