Discover how India’s exporters are impacted by the EU’s Carbon Border Adjustment Mechanism (CBAM) and how NetZero India offers expert consultancy to navigate compliance and thrive.
Introduction
In a bold move toward climate responsibility, the European Union (EU) has introduced the Carbon Border Adjustment Mechanism (CBAM)—a sweeping policy that’s already reshaping global trade. For India, one of the world’s fastest-growing economies and a significant exporter to Europe, CBAM is both a wake-up call and an opportunity.
In this new reality, Indian exporters of carbon-intensive goods are now accountable for the emissions embedded in their products—or face economic penalties at the EU border. With NetZero India stepping up to offer specialized CBAM consultancy, this seismic policy shift could be your business’s chance to go green and grow stronger.
What Is CBAM?
The Carbon Border Adjustment Mechanism is the EU’s answer to carbon leakage. It ensures that imported products are subject to the same carbon costs as goods produced within the EU. As of now, CBAM covers:
- Cement
- Iron and Steel
- Aluminum
- Fertilizers
- Hydrogen
- Electricity
🔗 More about CBAM on the European Commission’s official website
Why CBAM Matters to India
India is one of the largest exporters of steel, aluminum, and chemicals to the EU. According to the Council on Energy, Environment and Water (CEEW), India’s total exports to CBAM-affected sectors could be worth over $8 billion annually.
CBAM compliance, therefore, isn’t optional—it’s existential.
CBAM Timeline: From Transition to Enforcement
| Phase | Timeline | Key Requirement |
|---|---|---|
| Transitional | Oct 2023 – Dec 2025 | Report embedded emissions only |
| Enforcement | Jan 2026 onward | Purchase and submit CBAM certificates |
During the transition period, exporters must submit quarterly reports showing the emissions associated with the production of each good.
Challenges for Indian Exporters
1. Lack of Standardized Emission Reporting
India’s industrial sectors often operate without comprehensive emission tracking mechanisms. The EU mandates product-level emissions data, not just plant-wide reports. For exporters, this could mean costly new data collection tools and third-party verification.
2. Compliance Burden for SMEs
While conglomerates may adapt with internal ESG teams, small and medium enterprises (SMEs) face major hurdles in understanding, tracking, and reporting emissions accurately. This is one of major challenge that Carbon Border Adjustment Mechanism is treating with.
3. Carbon Cost Penalties
From 2026, EU importers will have to purchase CBAM certificates, priced according to the EU ETS (Emissions Trading System) carbon price. These costs may be passed down the supply chain, making Indian goods less competitive unless they reduce emissions.
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Opportunities CBAM Creates for India
1. Push for Green Innovation
CBAM forces companies to re-evaluate their supply chains and adopt cleaner technologies. This aligns perfectly with India’s Net Zero by 2070 goal and the nation’s push for green hydrogen, solar, and electrification of industries.
🔗 Read: How India Plans to Achieve Net Zero by 2070 – NetZeroIndia.org
2. Strengthen ESG Credentials
Being CBAM-compliant could boost a brand’s reputation as a sustainable business. In the long term, this can lead to access to green capital and international contracts prioritizing low-carbon sourcing.
3. Carbon Credit Trading
The Carbon Credit Trading Scheme (CCTS), 2023 launched by India opens doors to generate and trade carbon credits, potentially creating a new revenue stream for compliant businesses.
🔗 India’s Carbon Market Milestone Explained
NetZero India’s CBAM Consultancy: Your Compliance Partner
To address these challenges, NetZero India has launched a specialized CBAM Consultancy Program tailored for Indian exporters.
Services Offered:
- Carbon Footprint Auditing: We help assess the embedded emissions of each export product line.
- CBAM Report Preparation: From emission calculations to EU-format reporting, we handle it all.
- Compliance Training: Empower your staff with the latest EU and Indian carbon regulations.
- Technology Integration: We recommend tools for automated emission tracking.
- Carbon Credit Matching: We guide you on how to offset emissions via domestic or international credits.
💬 Contact us today: netzeroindia.org/contact
Key Sectors Impacted in India
| Sector | Top Exporters in India | EU Import Share (%) |
|---|---|---|
| Steel | Tata Steel, JSW, SAIL | 19% |
| Aluminum | Hindalco, Vedanta, NALCO | 11% |
| Cement | UltraTech, ACC, Dalmia Cement | 8% |
| Fertilizers | IFFCO, RCF, GNFC | 7% |
CBAM vs India’s Domestic Carbon Policy
India’s Carbon Credit Trading Scheme (CCTS) is aligned with global standards and will make it easier for Indian companies to monetize in-house reductions or purchase credits.
Comparison:
| Feature | CBAM (EU) | CCTS (India) |
|---|---|---|
| Applies to | Imports into EU | Domestic production |
| Enforcement Date | Jan 2026 | Effective from 2023 |
| Penalty for non-compliance | Carbon tax via CBAM certificates | Regulatory penalties, credit loss |
| Market access | EU market | Domestic and future international |
How to Prepare for CBAM in 2025
✅ Step 1: Conduct Product-Level Emission Assessments
Get third-party audited reports for emissions embedded in every export product.
✅ Step 2: Stay Informed
Join webinars, read policy updates, and follow platforms like NetZeroIndia.org/blog for the latest developments.
✅ Step 3: Start Reporting Now
Even though penalties start in 2026, the EU requires quarterly reports starting now.
✅ Step 4: Offset Strategically
Engage with certified carbon offset providers to prepare for 2026 pricing.
Final Thoughts
The Carbon Border Adjustment Mechanism may feel like a threat to Indian exports—but it’s also a massive opportunity to pivot toward sustainable, future-ready business practices.
With NetZero India’s end-to-end CBAM compliance consultancy, exporters can stop fearing this regulation and start leveraging it for global leadership in sustainable trade.
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