India and the UK are negotiating trade terms as Britain prepares to implement its Carbon Border Adjustment Mechanism (CBAM) in 2027. This carbon tax targets imports of steel, aluminum, cement, and fertilizers to prevent carbon leakage, potentially impacting hundreds of millions of dollars in Indian exports. The dispute centers on how these carbon pricing measures interact with the Comprehensive Economic and Trade Agreement (CETA). India has suggested it may rebalance duty concessions, such as those on Scotch whisky, if the UK's carbon and steel safeguard measures create unfair trade barriers.
