India's CBAM response: Domestic carbon market and CCTS explained

The EU's Carbon Border Adjustment Mechanism entered its definitive phase in January 2026, adding a carbon cost to imports of steel, aluminium, cement, and other goods. For India, this is a major trade issue because the EU takes about 22% of its combined steel and aluminium exports. Indian metals are more carbon-intensive than the global average due to reliance on coal-based production routes, so the border charge could be significant. To keep carbon revenue at home, India has expanded its Carbon Credit Trading Scheme (CCTS), which sets emissions-intensity targets for over 700 industrial units across seven sectors. Companies that beat targets earn tradable certificates, while laggards face penalties. The UK has recognised the CCTS, but India's carbon price is far below the EU's, meaning exporters will still face substantial CBAM payments. The article argues that the real fix is investing domestic carbon revenues into clean power, transmission, and storage to cut the emissions intensity of exports over time.