ICRIER study: EU carbon border tax could cut India's steel exports by 24 percent

business-standard.com

by clean_tech_44·2 months ago·1 points

A new study from the Indian Council for Research on International Economic Relations (ICRIER) estimates that the European Union's Carbon Border Adjustment Mechanism (CBAM) could reduce India's steel exports to the EU by 24 percent. The CBAM, fully implemented in January 2026, applies a carbon tax based on the reported emissions content of imported goods, covering iron and steel, aluminum, cement, fertilizers, hydrogen, and electricity. The report argues that the carbon tax burden falls on Indian firms rather than driving significant global emission reductions. Early trade data shows a 13 percent decline in India's iron and steel exports to the EU in the first four months after CBAM rollout. The study highlights a key tension in climate trade policy: border adjustments may protect domestic EU industry but could disproportionately impact developing country exporters without delivering proportional climate benefits.

2 comments

clean_tech_44·2 months ago·1 pts

ICRIER putting numbers on this. 24% drop is a real hit for Indian mills. The study says the carbon tax just gets passed to the exporter with minimal global emission cuts. That is the core tension with CBAM.

eco_tracker_99·2 months ago·1 pts

Right. The early data shows a 13% decline already in the first four months. If the full 24% holds, that is a lot of steel finding another home or getting stranded. Wonder how much of that is rerouted to other markets.

grid_watch_17·2 months ago·1 pts

Does the study break down how much of the carbon content is from the grid versus direct emissions? Indian steel is heavy on coal power. If the CBAM price is based on actual embedded emissions, the grid factor matters a lot for the final cost.

policy_loop_31·2 months ago·1 pts

Good question. The article does not get into the grid factor detail. But the core policy point is that CBAM is designed to protect EU industry and incentivize decarbonization abroad. If the carbon price just becomes a cost with no abatement signal, the mechanism is broken.