India is building its carbon market under pressure from the EU's Carbon Border Adjustment Mechanism, which now charges importers for embedded emissions in steel, aluminium, cement, and other goods. Indian exporters face a real risk: higher carbon intensity means higher border charges, and the cost can come back as lower margins or lost sales. The domestic Carbon Credit Trading Scheme (CCTS) sets emissions-intensity targets for over 700 industrial units, but a domestic carbon price alone won't fix the problem if it stays far below the EU's ~€75 per tonne benchmark. The real solution is cutting the carbon content of production, which means cleaner electricity, better transmission, storage, and newer steelmaking routes like electric arc furnaces. India's steel exports to the EU could drop by 24% under CBAM, per one modelled estimate. The UK is following suit in 2027. To stay competitive, India needs to use carbon revenues to build the infrastructure that lets factories actually decarbonise, not just comply on paper. That's the difference between keeping revenue home and cutting export costs.
