EU Plans to Fund Decarbonisation Technologies for Indian MSMEs

ENA MSME 2025-01-06 14:24:46 New Delhi, Jan 6 (KNN) The European Union (EU) has decided to support Indian Micro, Small, and Medium Enterprises (MSMEs) in addressing the challenges posed by its upcoming carbon tax, the Carbon Border Adjustment Mechanism (CBAM), by funding decarbonisation technologies, according to two industry insiders. This move is seen as a step toward easing friction in India-EU trade relations as negotiations for a Free Trade Agreement (FTA) continue. CBAM, set to take effect in 2026, will impose levies on carbon-intensive exports such as cement, steel, aluminum, fertilizers, and electricity. Indian officials have criticised the tax as a non-tariff barrier, arguing it contradicts the principle of equitable technology transfer from developed to developing nations, given historical climate change responsibilities. India, the EUs second-largest export market, has sought exemptions for its MSMEs, which account for 45 per cent of EU imports from India. The EUs initiative includes three projects under the EU-India Policy Dialogue Support Facility (PDSF). These projects aim to help Indian MSMEs with CBAM compliance, sustainability reporting (CSDR/CS3D), and adherence to product design regulations (ESPR). These initiatives could ease the financial and technical burdens on MSMEs, potentially improving market access, said Manuj Bhardwaj, CEO of Climatability, a decarbonisation advisory firm. The PDSF projects will involve capacity-building, funding for green technologies, and support for emissions monitoring. Non-governmental organizations may assist in aligning MSMEs with EU standards, with findings submitted for approval by 2026. Indian MSMEs, exporting textiles, chemicals, electronics, and more, face heightened compliance costs and potential market barriers under CBAM and related EU directives. The proposed support aligns with Indias Raising and Accelerating MSME Performance (RAMP) scheme, jointly funded by the Indian government and the World Bank. While the EU's plans offer hope for reduced trade tensions, exemptions for Indian MSMEs remain uncertain. Negotiations under the FTA and related forums will determine whether this initiative transforms into broader concessions. The EUs CBAM highlights the tension between climate action and economic equity, with India advocating for fair treatment under the principle of Common but Differentiated Responsibilities (CBDR). Both sides appear keen to balance environmental and trade priorities in the years ahead. (KNN Bureau) 40524 https://knnindia.co.in/news/newsdetails/msme/eu-plans-to-fund-decarbonisation-technologies-for-indian-msmes 2025-01-06 14:24:46 knnindia.co.in EU Plans to Fund Decarbonisation Technologies for Indian MSMEs