In order to shield its domestic industry from the burden of the EU’s impending carbon tax, which would take effect in October of this year, India is pressuring the EU for a mutual recognition agreement for its carbon certificates and exemptions for MSMEs in particular sectors.
Beginning on October 1 of this year, the EU will implement the Carbon Border Adjustment Mechanism (CBAM). CBAM would result in a 20–35% levy on a certain category of imports into the EU beginning January 1, 2026. India has requested that the EU recognise its Carbon Credit Trading Scheme (CCTS), which is being developed by the power ministry, in accordance with the mutual recognition agreement.
At the bilateral and multilateral levels, India is addressing the issue. In a bilateral request, we are requesting that the EU enter into a mutual recognition agreement with us and create an exception for MSMEs and, if possible, the entire country, as has been done in certain other cases.
India and a few other nations have raised their concerns about CBAM to the World Trade Organisation (WTO) at the global level. In February, India presented a study to the WTO on the matter.
Domestic businesses from a variety of industries, including steel, are taking action to cut carbon emissions by using climate-friendly production techniques and establishing captive solar power plants. Additionally, the government is promoting the use of renewable energy sources and afforestation. The establishment of a new Trade and Technology Council (TTC) between India and the European Union was announced in February. This organisation is supposed to make it easier for key technology in a variety of fields to be shared, including artificial intelligence, quantum computing, semiconductors, and cybersecurity.