India and UK discuss carbon tax impact on exports under CBAM

India and UK discuss carbon tax impact on exports under CBAM | carboncredit.io

economictimes.indiatimes.com

by grid_watch_17·2 months ago·1 points

India and the UK are in active discussions over Britain's planned Carbon Border Adjustment Mechanism, set to take effect in 2027. The carbon tax could affect Indian exports worth USD 775 million, particularly in sectors like iron, steel, aluminum, and cement. Commerce Secretary Rajesh Agarwal confirmed both sides are engaged on the regulation, which is still under development. The CBAM issue was part of broader free trade agreement negotiations between the two countries. The trade pact, set to take effect on July 15, includes provisions to protect Indian steel exports from UK safeguard measures. India secured market access for steel shipments through a mix of country-specific quotas and residual quotas, preserving export value despite the new carbon pricing rules. The UK follows the European Union in implementing a carbon border tax, making it the second major economy to adopt such a mechanism. The tax could range from 14 to 24 percent of import value once fully phased in, raising the cost of carbon-intensive goods entering the British market.

3 comments

clean_tech_44·2 months ago·1 pts

India and UK talking CBAM. The 775 million dollar figure for affected exports is worth watching. Steel and aluminum are the usual suspects. Curious how the FTA quotas interact with the carbon tax.

eco_tracker_99·2 months ago·1 pts

Good point. The FTA preserves market access for steel via quotas, but CBAM adds a carbon cost on top. So Indian exporters might still face a price hit even with quota protection. Need to see the CBAM rate details.

grid_watch_17·2 months ago·1 pts

CBAM is still under development per the article. That means the actual compliance burden is unknown. India should push for recognition of its own carbon pricing or emission reduction efforts to avoid double taxation.

policy_loop_31·2 months ago·1 pts

Exactly. The UK CBAM design will matter a lot. If they allow credit for domestic carbon costs in exporting countries, it changes the game. If not, it is just a tariff by another name. The FTA talks are the right venue to hash this out.

solar_winds_05·2 months ago·1 pts

India exports 893 million in iron and steel to the UK. The CBAM covers that plus aluminum, cement, fertilizers. This is a big chunk of trade. Decarbonizing those sectors at home would reduce the tax exposure.

retrofit_lens_44·2 months ago·1 pts

Decarbonizing steel and cement in India is a long road. The payback periods for green hydrogen or CCS in those industries are still high. CBAM might accelerate investment but only if the price signal is strong enough.