UK agreed to rebalance FTA if carbon tax impacts trade, says govt source
This story was originally published at 19:09 IST on 25 July 2025
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NEW DELHI – The UK has agreed to rebalance the freshly signed Comprehensive Economic and Trade Agreement, in case the island nation imposes Carbon Border Adjustment Mechanism and that impacts India's trade interest, a senior government official said Friday.
Thursday, the two nations signed a free trade agreement under which India has committed to cut duty on 90% tariff lines while the UK would slash duty on 99% tariff lines. Both sides have set the aim of doubling bilateral trade by 2030. Trade between India and the UK was worth $23.15 billion in the financial year 2024-25 (Apr-Mar).
UK is still at the preparatory stage of Carbon Border Adjustment Mechanism, and it may get implemented only from 2027. In case the UK's proposed Carbon Border Adjustment Mechanism results in adverse effect for the covered products, India will take steps to ensure that the market access concessions provided under the free trade agreement are not eroded, the official said.
To mitigate the risks of climate change, the EU had announced a phased implementation of the Carbon Border Adjustment Mechanism in October 2023. 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. India had voiced concerns over the development and Finance Minister Nirmal Sitharaman had called them unilateral and arbitrary. End
Reported by Sagar Sen
Edited by Deepshikha Bhardwaj
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