India and EU create CBAM work plan in FTA to help SMEs with carbon border rules

India and the European Union have included a dedicated CBAM annex in their proposed free trade agreement to help small and medium exporters handle carbon border compliance. The plan covers verification, embedded carbon calculation, and recognition of verifiers by EU authorities. India is also developing its own carbon pricing mechanism, and negotiators are discussing how domestic carbon costs could offset CBAM liabilities in Europe. Darpan Jain, India's chief FTA negotiator, said the annex includes provisions for engaging with EU authorities on carbon price paid in India. The EU's CBAM took effect in January 2026, imposing carbon costs on imports of steel, aluminum, and cement. The work plan aims to prevent compliance burdens on Indian SMEs while keeping trade flowing under the new rules.