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EU Carbon Tax Hike Threatens Indian Exports
16 Apr
Summary
- EU plans major expansion of Carbon Border Adjustment Mechanism.
- Indian exporters may face sharply increased carbon tax costs.
- New rules could affect engineering goods from January 2028.
The European Union is set to expand its Carbon Border Adjustment Mechanism (CBAM), a border carbon tax that could significantly increase costs for Indian manufactured exports to Europe. The European Parliament's Committee on the Environment, Climate and Food Safety proposed major changes on April 10, 2026, to the CBAM regime.
These proposed changes include extending CBAM to approximately 180 additional steel- and aluminium-based manufactured products from January 1, 2028. It also involves tightening carbon accounting rules for scrap-based production and examining the expansion of indirect emissions from electricity use across more sectors.
This expansion means CBAM will move beyond raw materials to cover a wider range of manufactured industrial goods. Indian exporters of engineering goods, auto components, fabricated metal products, machinery, and other industrial items should anticipate facing higher carbon taxes when exporting to Europe from January 2028.
