International News

EU Carbon Border Tax 2026

October 15 , 2026 16 hrs 0 min 9 0

The European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on January 1, 2026, increasing compliance requirements for Indian exporters.
CBAM covers selected imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen to account for their embedded carbon emissions.
Payments for emissions linked to 2026 imports are scheduled to begin in February 2027, with annual declarations and certificates due by September 30, 2027.
The mechanism aims to prevent carbon leakage by applying a carbon cost to imports comparable to that faced by European Union producers under the EU Emissions Trading System (EU ETS).
Indian Micro, Small and Medium Enterprises (MSMEs) face challenges from compliance costs, complex paperwork and difficulties obtaining verified emissions data from suppliers.
A June 2026 study by the Indian Council for Research on International Economic Relations (ICRIER) estimated that India’s iron and steel exports to the EU could decline by 23.94% under a scenario with a carbon price of US$86.01 per tonne of carbon dioxide.