The Indian government, through its Commerce Department, is rapidly stepping up efforts to prepare national exporters for the European Union's carbon tax regime under the Carbon Border Adjustment Mechanism (CBAM). This proactive step comes as the definitive CBAM regime entered into force in January 2026, followed by the commencement of financial payments in 2027.
To raise awareness, the Department of Commerce—in collaboration with the National Accreditation Board for Certification Bodies (NABCB) and the Engineering Export Promotion Council (EEPC)—recently organized a special awareness session at Vanijya Bhawan in New Delhi. Attended by around 100 exporters and industry stakeholders, the session focused on mastering emissions data, reporting procedures, and strict EU accreditation and verification requirements.
In its initial implementation phase, the EU CBAM specifically targets six carbon-intensive sectors: iron and steel products, aluminum, fertilizers, cement, electricity, and hydrogen. The Indian government recognizes that this mechanism could increase the effective cost of carbon-intensive exports to Europe and erode the competitiveness of domestic products, especially if producers fail to provide verified actual emissions data. Consequently, practical case studies for the iron, steel, and aluminum sectors were thoroughly discussed to help businesses understand how the rules apply in practice.
Pankaj Chadha, Chairman of EEPC India, emphasized the importance of comprehensive preparedness across the entire export value chain, including the availability of valid emissions data from local suppliers. Establishing effective verification mechanisms is seen as a key factor enabling Indian exporters to comply with regulations without significant hurdles. The biggest challenge currently facing Indian exporters is building reliable emissions tracking systems to meet the first annual reporting deadline.
Under EU regulations, importers are required to report embedded emissions annually and surrender CBAM certificates. The first annual declaration and certificate surrender, covering imports made throughout 2026, will be due by September 30, 2027. Through these accelerated preparations, India aims to mitigate financial impacts while safeguarding the presence of its export products in the European market.
