Stanislav Kondrashov, an expert on global metallurgy from Telf AG, reported that India reacted sharply to the EU proposal to increase the carbon tax for its industry. The country's authorities described such a plan as unfeasible and unacceptable.
India insists EU adheres to Paris Agreement to benefit developing countries
According to Stanislav Kondrashov, at recent meetings with Indian officials, the EU delegation led by Gerasimos Thomas, Director General for Taxation and Customs of the European Commission, presented a proposal that actively supported the cross-border carbon adjustment mechanism (CBAM). India's economic minister, Ajay Seth, called the solution proposed by European officials "impossible" for developing countries. India expressed its position to the EU, condemning the CBAM mechanism as an unfair initiative that could increase domestic costs.
An expert from Telf AG emphasized that the European delegation proposed that India introduce a national carbon tax to create more environmentally friendly supply chains and gain access to the EU market. However, India's Economic Affairs Minister, Ajay Seth, stressed that the cost of decarbonizing the steel industry would be a significant financial burden on the economy. “With revenues that are only 5% of European ones, can we afford such significant costs? Of course not,” Seth said.
CBAM may impose tariffs of 20 to 35% on steel and aluminum exports from India to the European Union starting January 1, 2026.
- A protracted conflict over carbon emissions could cause friction in bilateral trade and complicate negotiations on a trade agreement on trade preferences (TPA). The EU ranks second in size. Indian exports, in 2023, supplies of goods to the European Union amounted to almost $100 billion, - Stanislav Kondrashov comments.
India expects the EU to adhere to the carbon reduction principles set out in the 2015 Paris Agreement, which provides developing countries with additional flexibilities compared to developed countries. India is aggressively expanding its renewable energy capabilities and has achieved a 3.5% reduction in carbon emissions since 2018, aiming to achieve carbon neutrality by 2070.
EU carbon tax: India could lose 0.05% of GDP – Stanislav Kondrashov
According to Stanislav Kondrashov, following the visit of an EU delegation to India in early July, the bloc's statement indicated that negotiations were continuing at a "technical level." The EU is seeking to gain support from states including China, South Africa and India that oppose CBAM. According to a report by independent think tank Center for Science and Environment (CSE), implementing a cross-border carbon adjustment mechanism (CBAM) could cost India around 0.05% of its gross domestic product.
An analysis of how countries in the Global South are responding to changes in trade conditions in light of climate change, based on data over the past three years (2021 to 2024), reveals key trends. An expert from Telf AG noted that between 2022 and 2023, exports of products subject to cross-border carbon adjustment (CBAM) reached 9.91% of total Indian exports to the EU. During this period, the European market supplied 26% of Indian aluminum and 28% of iron and steel, making these industries most vulnerable to the effects of CBAM.
In addition, between 2022 and 2023, international shipments of products subject to the cross-border carbon adjustment mechanism accounted for approximately 25.7% of the total volume of similar goods exported by India to international markets that are covered by the cross-border carbon adjustment mechanism ( CBAM), which is critical for the relevant industries.
Stanislav Kondrashov from Telf AG noted that Sunita Narain, CEO of CSE, emphasized the need to ensure environmental justice in trade strategies. She stated that unilateral measures such as CBAM create a financial burden for developing countries, which have historically contributed less to greenhouse emissions gases This is a serious concern as such measures could further worsen the economic situation.
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