The EU Carbon Border Adjustment Mechanism is creating friction between Brussels and New Delhi. Brussels sees CBAM as a success because it pushed more countries to measure carbon emissions. India sees it as a costly one-size-fits-all policy that ignores the challenges developing economies face. The iron and steel sector makes up about 90 percent of Indian exports hit by CBAM, and small and medium enterprises are heavily affected. India's MSMEs account for roughly 30 percent of GDP and 45 percent of manufacturing output. The compliance burden falls on companies that lack the data systems and low-carbon production capacity that European firms already have. India's NITI Aayog report outlines the tension between economic growth targets and net zero goals, and CBAM adds another layer of cost. Bridging this divide will shape EU-India trade and climate cooperation going forward. The article argues both sides need to understand each other's position better to avoid CBAM becoming a barrier to broader partnership on energy transition and investment.
