More Stories

Informist, Wednesday, Oct. 9, 2024

 

Please click here to read all liners published on this story

--Sitharaman: Looking at newer blended financing avenues for green projects 
--Sitharaman: Have funds for e-public transport in tier 1, tier 2 cities 
--Sitharaman: Encouraging cos to come forward in electrical vehicle sector 
--Sitharaman: 2 mln households already applied for PM-Suryaghar yojana 
--Sitharaman: Looking at ways India can reduce energy transition cost 
--Sitharaman: India opposition to carbon tax unlikely to deter EU trade pact 
--Sitharaman: Will voice concern over carbon tax at trade pact talks with EU 
--Sitharaman: EU's carbon tax unilateral, arbitrary 
--Sitharaman: See EU's carbon tax as trade barrier 
--Sitharaman: Unsure if EU carbon tax is World Trade Organization compliant 
--CONTEXT: Finance Minister Sitharaman speaking at Energy Transition Summit 
--Sitharaman: See EU's carbon tax hurting India industry 

 

NEW DELHI – The European Union's much talked about Carbon Border Adjustment Mechanism, or CBAM, is unilateral and arbitrary, and will hurt the domestic industry once it is implemented, Finance Minister Nirmal Sitharaman said today. It is a border tax introduced by a bloc as per its own convenience and "I am unsure if it is World Trade Organization-compliant", she said, while speaking at the Energy Transition Summit organised by Financial Times.

 

To mitigate the risks of climate change, the EU announced a phased implementation of the Carbon Border Adjustment Mechanism in October last year. Under this, those exporting goods to the EU have to report the carbon content of the commodity, based on which, they would be taxed. The carbon tax collection is expected to begin from 2026.

 

The decision by the EU may affect the profitability of Indian exporters, as Europe is among the top export destinations for the country. India's total trade with the EU was $137.41 bln in 2023-24 (Apr-Mar), with imports at $61.48 bln and exports at $75.93 bln.

 

The Indian government has been making a case for an exemption from this mechanism, which it considers protectionist and a trade barrier. The EU's decision to impose a border adjustment tax goes against the interests of the global south and "is not moral at all", she had said earlier. 

 

India is currently negotiating for a free trade agreement with the European Union and Sitharaman said that at the negotiations, the Indian delegation would positively and repeatedly voice concern against the carbon tax. However, she said it was unlikely that India's opposition to the Carbon Border Adjustment Mechanism would be a barrier to finalising the trade agreement. "I do not think so, we will negotiate and strike a balance," she said. 

 

The finance minister's dissent regarding the carbon tax was also because of India's low carbon footprint compared to Western countries. She said a tax like the carbon tax put India at a disadvantage when the country imposing the tax was actually trying to protect its domestic interests.

 

Sitharaman also spoke about India's energy transition efforts, stating that the government was focussed on introducing electric public transport in tier-I and tier-II cities. Last month, Road Minister Nitin Gadkari had said the government was developing a more robust public transport system as this was key to achieving the net-zero target. India has set an ambitious goal of achieving net-zero carbon emissions by 2070.

 

Sitharaman further said the electric vehicles sector – which the government has hand-held through production incentive schemes – is now robust, but there was scope for scaling up. "I would encourage more and more companies to come and invest in the EV space," she said. 

 

She said India's net-zero target had a few hurdles, including access to financing. Besides, the government is also looking at ways to lower energy transition costs.

 

She said the government, along with the Reserve Bank of India, was looking at newer blended financing avenues for green projects. The finance minister also mentioned green bonds as one of the innovations was seeking in order to mobilise funds for sustainable projects. First launched in 2022-23 (Apr-Mar), the government's sovereign green bonds have so far seen a tepid response. Besides the maiden issuance, which received a greenium of 6 basis points, subsequent auctions of 5- and 10-year sovereign green bonds have only achieved 1-5 bps of greenium. 

 

Among the government's initiatives for low-cost energy transition, the finance minister spoke about the PM-Suryaghar Muft Bijli Yojana—which is a rooftop solar programme, under which it aims to provide 300 units of free electricity per month to 10 million households. The scheme was launched in February and so far, about 2 million households have already applied for it, she said.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2024. All rights reserved.