Indian Steel MSME Exporters Hit As EU’s CBAM Payment Phase Begins

New Delhi, Jan 29 (KNN) Indian micro, small and medium enterprises (MSMEs) in the steel sector are reporting shipment seizures, order cancellations and rising compliance burdens since the European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its payment phase on January 1, 2026.

CBAM, a carbon levy on imports of high-emission goods such as steel, cement and aluminium, requires carbon reporting and payment for imports exceeding 50 tonnes per year. India was unable to secure any concession on CBAM in its free trade agreement with the EU signed on January 27, reported Business Standard.

According to Nilesh Bhattad, founder, CleanCarbon.ai, at least 10 Indian consignments have been held at European ports this month over missing or incomplete carbon declarations. 

One Mumbai-based tractor exporter saw a shipment stuck in Poland, leading to heavy detention charges, while another lost a 7,000-tonne steel order after CBAM added Rs 5–6 crore to costs, making the deal unviable.

Analysts warn the disruption could be widespread. CleanCarbon estimates that 25,000–30,000 MSMEs exporting indirectly to the EU and 3,000–4,000 direct exporters are now exposed to CBAM risk. 

Carbon levies for many MSMEs have tripled to EUR 240–300 per tonne under the EU’s punitive default emissions values, reflecting India’s fragmented supply chains and limited emissions data.

Exporters report that the biggest hurdle is the lack of reliable emissions data from dozens of small suppliers in their value chains, making compliance costly and complex for firms without robust infrastructure. 

Even India’s ‘green steel’, with emissions of 1.7–1.9 tonnes of CO₂ per tonne, falls above the EU’s tax-free benchmark of 1.34, meaning exporters may still face carbon costs.

CBAM’s impact is expected to constrain export volumes, profitability and competitiveness unless exporters secure emissions data and adapt production processes to meet EU carbon criteria.

(KNN Bureau)