In line with its ambitious goal of achieving net-zero greenhouse gas emissions by 2050, the European Union (EU) adopted a groundbreaking plan this year to introduce tariffs on imports of high-carbon goods, including steel and cement.

Oct 04, 2023

In an effort to address the concerns of domestic steel producers regarding the European Union’s proposed tariffs on high-carbon imports, the Indian government has pledged to explore potential solutions and is actively engaging in discussions with its European counterparts. Mr. Nagendra Nath Sinha, the most senior civil servant at the Federal Ministry of Steel, in an interview, said, ”We are discussing with stakeholders and continuing to look at ways in which India’s trade interests in steel could be safeguarded. India’s government has raised its concerns at both bilateral and multilateral levels with the EU as the tariffs would impact India’s steel exports.” 

In line with its ambitious goal of achieving net-zero greenhouse gas emissions by 2050, the European Union (EU) adopted a groundbreaking plan this year to introduce tariffs on imports of high-carbon goods, including steel and cement. This unprecedented measure has elicited concerns from major steel exporters to the EU, who fear potential disruptions to their trade flows. Industry officials in India have expressed concerns over the looming implementation of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which threatens to impose steep tariffs on steel exports. Set to take effect in 2026, the CBAM aims to level the playing field between European industries subject to a carbon market and foreign producers, who would need to purchase certificates to account for their carbon emissions. The exporters could face tariffs ranging from 20 percent to 35 percent, potentially jeopardizing billions of dollars worth of exports to the EU.

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In a recent report, research group Wood Mackenzie projected a 56 percent increase in the cost of India’s steel exports to the EU by 2034 as a result of the Carbon Border Adjustment Mechanism (CBAM). As part of the CBAM’s initial phase, the 27-nation bloc has mandated EU importers to report the greenhouse gas emissions embedded in the production of their goods, including steel.