More Stories

Informist, Thursday, Apr. 16, 2026

 

NEW DELHI – The European Union has proposed to expand the scope of the Carbon Border Adjustment Mechanism by levying duty on 180 more products, including select steel- and aluminium-intensive downstream products, starting 2028. Brussels implemented its Carbon Border Adjustment Mechanism in January, which entails duty collection on shipments entering the EU based on their reported carbon. 

 

The EU has also proposed expanding the mechanism to also cover indirect emissions from electricity use across more sectors, tightening carbon accounting rules for scrap-based production, and rejecting the use of international carbon credits for compliance. Under the mechanism, importers in the EU are required to report the greenhouse gas emissions embedded in their shipments, and pay a levy based on the carbon content in the products.

 

The expansion of the scope of the carbon tax is likely to impact most of India's engineering goods, auto parts, machinery and fabricated metal exports to the EU, the Global Trade Research Initiative said in a report. According to the think-tank, maximum industrial products entering the EU could face carbon tax exposure by 2030.

 

The expansion of the mechanism can complicate the India-EU trade dynamics, especially considering the two sides aim to implement their free trade agreement, concluded in January, by March 2027. After implementing the deal, European goods would enter India at lower tariffs under the FTA, while Indian exports will face the burden of carbon tax in the EU. 

 

Under the trade deal, New Delhi and Brussels have agreed to set up a technical group to facilitate Indian industries' smooth access to the EU market despite the carbon regulation. The European Commission has also committed under the trade deal that they would take into account India's carbon trading system, whenever New Delhi implements it in the future, under its carbon regulation. But the latest proposal to reject international carbon credits is contrary to the EU's commitment. Both sides are currently engaged in legal scrubbing of the text of the trade deal and aim to sign it by December.  End

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

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. 2026. All rights reserved.