India and EU close to deal on carbon tax in trade talks
India and the European Union (EU) are nearly set to settle their differences over the new Carbon Border Adjustment Mechanism (CBAM) as they wrap up free trade negotiations ahead of their January 27, 2026 summit.
The plan? Both sides want to sync up how they measure emissions for key industries like steel and cement, so Indian exports don't get unfairly taxed at the EU border.
Why should you care?
This matters because CBAM just kicked in, adding steep new taxes on carbon-heavy imports—making things tougher for Indian businesses, especially smaller ones already juggling rising costs.
The compromise aims to protect Indian exporters from losing out on trade benefits, give industries time to adapt with cleaner tech, and keep revenue from these taxes within India instead of sending it overseas.
It's all about balancing climate action with fair opportunities for Indian companies.