EU CBAM and Indian exporters

EU producers of steel, cement and aluminium pay for their emissions under the EU Emissions Trading System. Without a border measure, they would be at a disadvantage against imports from countries with no carbon price, and production could move abroad. The Carbon Border Adjustment Mechanism (CBAM) puts a matching carbon price on certain imports.

Legally, CBAM falls on the EU importer, not on the Indian exporter. In practice, the cost and the data requirements pass back to exporters, through lower prices, buyer demands for verified emissions data, or lost orders.

India is among the countries most exposed, because its steel and aluminium are more carbon-intensive than the global average and the EU is a major market. CBAM gives efficient, low-carbon Indian producers an advantage and penalises the rest.

Coverage

Cement, iron and steel (including certain downstream products such as screws, bolts and steel structures), aluminium, fertilisers, electricity and hydrogen, as listed by customs code in the CBAM Regulation (EU) 2023/956.

Timeline

The 2025 simplification

Importers bringing in less than 50 tonnes a year of iron and steel, aluminium, fertilisers or cement have no CBAM obligation. This exempts about 90% of importers while keeping about 99% of embedded emissions covered. Electricity and hydrogen are not exempt.

Price and payable share

The certificate price follows EU ETS auction prices: set quarterly for 2026 imports and weekly from 2027. The first official price, for the first quarter of 2026, was €75.36 per tonne of CO2 equivalent. Because EU producers still receive some free allowances, importers pay for only a share of embedded emissions, rising as free allocation is phased out:

Data: verified or default

Importers can use verified actual emissions data from the producing plant, or the Commission's default values, which carry a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028. For efficient plants, verified data is usually much cheaper than defaults.

Carbon prices paid at home

CBAM allows a deduction for carbon prices actually paid in the country of origin. As of June 2026, India's CCTS was not recognised for this deduction.

The India-EU trade agreement

India and the EU concluded negotiations on a free trade agreement on 27 January 2026. The agreement does not exempt India from CBAM. Both sides said they would work on a pathway for Indian exporters, and the deal includes support to help exporters cut emissions and comply.