Carbon Tax
EU carbon tax repeat of colonialism, aims to deplete other economies, Sitharaman says
This story was originally published at 07:43 IST on 7 May 2025
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NEW DELHI – The European Union's proposed Carbon Border Adjustment Mechanism or CBAM, which entails tax collection from those exporting to the EU, is a "repeat of colonialism", Finance Minister Nirmala Sitharaman said late on Tuesday. The EU merely aims to deplete the resources of other economies to improve its own industries, Sitharaman said.
"I would like to question the morality of CBAM. What exactly is the aim?" Sitharaman asked rhetorically, while comparing the Indian steel industry with that in Europe. Neither sides' industry is green yet, and both sides need funds to make their steel industry eco-freindly, Sitharaman said, adding that the EU now wants to extract funds from other countries through carbon tax and divert it towards the greening of its own industry.
"Don't extract from me what you need for greening."
Under the CBAM, those exporting goods to the EU have to report the carbon content of the commodity, which will determine the tax on it. The carbon tax collection is expected to begin in 2026. The levy will hamper 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 billion in 2023-24 (Apr-Mar), with imports at $61.48 billion and exports at $75.93 billion.
New Delhi, which is in negotiations for a free trade agreement with Brussels, sees the CBAM proposal as a non-tariff barrier. But Sitharaman said she is hopeful that both sides could reach common ground on the EU's climate norm and seal the deal. The two sides have set a timeline to conclude the trade negtiations by the end of 2025.
Last month, Indian Commerce Minister Piyush Goyal had said that except for non-trade issues and non-tariff barriers, New Delhi and Brussels could "amicably" resolve the rest of the matters under the trade deal. End
US$1 = INR 84.43
Reported by Krity Ambey
Edited by Avishek Dutta
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