Why India is worried about EU's carbon tax
India is asking the European Union for flexibilities from its upcoming Carbon Border Adjustment Mechanism (CBAM), which will impose a carbon price on imports like steel, aluminum, and cement starting January 1, 2026.
The EU says this move is to curb "carbon leakage" and make sure everyone plays by similar climate rules—but it puts a spotlight on sectors that are major players in India's exports.
CBAM could make Indian industries less competitive in Europe
If CBAM goes ahead as planned, Indian industries—especially steel and aluminum—could see their costs go up, making them less competitive in Europe.
To soften the blow, India is considering its own carbon tax so money stays local instead of flowing to the EU.
The government has even hinted at possible trade retaliation if things don't change.
With companies like Nalco aiming for greener production by 2030 and big trade talks ongoing between India and the EU, how this plays out could shape jobs, prices, and climate action for years to come.