India's Bold Move to Protect Steel Trade from EU Carbon Tariff

India's Response to EU Tariffs on High-Carbon Imports

---

The Indian government has reaffirmed its commitment to addressing the concerns of domestic steelmakers regarding the EU's planned tariffs on high-carbon imports. A government official expressed optimism and stated that they are actively engaging with their European counterparts to find solutions.

Nagendra Nath Sinha, the highest-ranking civil servant at the federal Ministry of Steel, shared in an interview with Reuters, "We are actively collaborating with stakeholders and exploring various avenues to safeguard India's trade interests in the steel sector."

He further highlighted the government's proactive approach, saying, "(India's) government has raised its concerns both bilaterally and multilaterally with the EU." He emphasized that the proposed tariffs would have a significant impact on India's steel exports.

This year, the European Union took a groundbreaking step by approving a plan to impose tariffs on high-carbon goods like steel and cement, aligning with its ambitious goal of achieving net-zero greenhouse emissions by 2050. This move has generated widespread concern among leading commodity exporters to the EU, including India.

Indian industry officials have cautioned that these tariffs could potentially affect exports worth billions of dollars. The Carbon Border Adjustment Mechanism (CBAM), the mechanism through which the EU plans to implement these tariffs (ranging from 20% to 35%), is set to be enacted in 2026. Under CBAM, exporters to the European Union will be required to obtain certificates to offset carbon emissions, creating a level playing field with EU industries that purchase permits from the EU's carbon market when they generate pollution.

A recent report from the research group Wood Mackenzie projected that by 2034, the cost of India's steel exports to the EU could surge by 56% due to the implementation of CBAM.

As part of the initial phase of CBAM, the 27-nation EU bloc has already requested EU importers to disclose the greenhouse gas emissions associated with the production of their goods, including steel. This collaborative effort demonstrates the commitment of both India and the EU to address environmental concerns while safeguarding trade interests.

Source: Reuters (Reporting by Neha Arora)