India–EU Trade Pact Keeps CBAM Outside FTA, Offers Rebalancing Safeguards

New Delhi, Jan 28 (KNN) Under the proposed India–EU trade agreement, which intends a phased reduction of tariffs on 96 percent of exports from both sides, the European Union has chosen to tread cautiously on the Carbon Border Adjustment Mechanism (CBAM), keeping the issue outside the scope of the treaty.

While CBAM, seen by India as a levy on imports of high carbon goods such as steel and cement, has been a contentious point, the Free Trade Agreement (FTA) includes provisions for rebalancing rights if EU measures adversely impact Indian exporters, an official told The Times Of India. 

Indian trade negotiators have successfully sealed the ‘forward most favourable nation’ clause on CBAM, along with US. The EU has also assured India that it will not extend more favourable CBAM-related treatment to other trading partners without offering similar concessions to New Delhi.

“CBAM is a difficult issue. It is a horizontal regulation without flexibility for anyone. We have nudged them,” the official said, adding that both sides have agreed to hold discussions on technical aspects of the carbon levy. The EU has also indicated openness to recognising Indian agencies for assessing carbon footprints.

India and the EU have further agreed to enhance technical cooperation on carbon pricing, verification mechanisms and compliance with emerging carbon standards. This will be supported by financial assistance and targeted measures to help reduce greenhouse gas emissions.

As part of this effort, the EU has committed EUR 500 million in support to assist India in its emissions reduction initiatives.

(KNN Bureau)