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EU’s Climate Trade Measure
January 5 , 2026
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- The European Union (EU) has started the Carbon Border Adjustment Mechanism (CBAM).
- CBAM imposes a carbon tax on imports of steel, aluminium, cement, chemicals, paper, glass, fertilisers, and power-sector goods.
- Indian exports of steel, iron, and aluminium are affected due to high carbon emissions in production.
- Most Indian steel is made by the Blast Furnace–Basic Oxygen Furnace (BF–BOF) route, which produces high emissions.
- Cleaner steel production uses the Electric Arc Furnace (EAF) route, which recycles steel scrap.
- CBAM may increase costs for Indian exporters and affect Micro, Small, and Medium Enterprises (MSMEs) the most.
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