EU carbon border tax hits India's small steel and iron exporters hard

The European Union's Carbon Border Adjustment Mechanism (CBAM) is now fully operational, taxing carbon-intensive imports like iron and steel. For India's micro, small and medium enterprises (MSMEs) in this sector, the impact is severe. Many export indirectly through supply chains and face a compliance burden they cannot easily absorb. Early data shows exports to the EU dropped 11% in 2024-25 compared to 2022-23, with steel and aluminium down 24% in financial year 2025. India has argued at the WTO that CBAM is a unilateral trade barrier that violates the principle of common but differentiated responsibilities. The tax forces Indian exporters to either cut prices by 15-22% to stay competitive or invest in emissions tracking across their entire production process. Smaller firms, which make up 99% of India's MSMEs, are especially vulnerable and risk being replaced by larger players in EU trade.