A CII-IIM report warns that Indian exporters face rising costs as the EU's Carbon Border Adjustment Mechanism takes effect. Without a credible domestic carbon market, Indian producers of steel, aluminium, cement, and other covered goods could end up paying EU carbon levies while also losing revenue to overseas regulators. The report argues that a functioning domestic market would let Indian industry price carbon internally and potentially avoid or reduce CBAM charges, but only if the market is designed to meet EU accounting and verification standards. The key issue is credibility. A carbon market that just issues cheap credits or lacks strict monitoring, reporting, and verification will not convince the EU, and exporters would still face full CBAM exposure. The report points to the need for clear sector coverage, reliable emissions data, and enforcement mechanisms that align with international rules. For Indian exporters, the practical question is whether such a market can be stood up in time to matter. For anyone following carbon pricing in emerging economies, this is a concrete example of how trade policy is pushing domestic climate policy forward. The report is worth reading for its take on what a credible market actually needs to deliver, not just how quickly it can be launched.
