India-EU trade deal includes CBAM provisions to help SMEs with carbon tax compliance, says official

A senior Indian commerce official said the India-EU free trade agreement includes a dedicated annexure to address concerns over the EU's Carbon Border Adjustment Mechanism (CBAM). The provisions aim to give India flexibility if the EU extends it to other countries, help small and medium enterprises with compliance, and allow offsetting of carbon prices paid in India against EU obligations. The official noted that India is developing its own carbon pricing mechanism, and the deal includes a framework to engage with EU authorities on how to account for domestic carbon costs. This is relevant for exporters of steel, aluminum, and other goods subject to CBAM, which took effect in January 2026. The commerce ministry plans outreach programs across Indian districts to help businesses understand and use the FTA. The deal is expected to be signed later this year and take effect in 2027.