Exporters Seek Negotiations on CBAM Charges

Chennai: While the India-EU Free Trade Talks are underway in New Delhi, Indian firms are worried about the negative impacts of some of the EU regulations like Carbon Border Adjustment Mechanism (CBAM), which will make them pay 20-35 per cent of tariff equivalent charges.

“Indian firms are concerned about the potential negative impacts of regulations like the Carbon Border Adjustment Mechanism (CBAM), deforestation regulation, and supply chain regulation. These regulations would adversely impact India’s exports to the EU,” said Ajay Srivastava, founder of GTRI.

After the implementation of the FTA, the EU products will continue to enter India at zero duties, while Indian products may pay 20-35 per cent tariff equivalent as CBAM charges. They want the negotiations to look into this in the FTA agreement.

According to Ajay Sahai, secretary general of FIEO, the EU allows the firms to pay an Equalization Levy, which could be used for green initiatives in their own country. “This way, the charges can be paid to one’s own country rather than the importing country. CBAM will not be a major challenge for large companies which meet emission levels and those who have a presence in Europe. The smaller players will find it as a challenge,” he said.

Further, the EU is seeking tariff elimination on over 95 per cent of its exports, including sensitive agricultural products and automobiles, while India is comfortable opening up only around 90 per cent of its market and is hesitant to lower tariffs on bulk agricultural products. Differing views on new issues like sustainability, labour standards, intellectual property rights, and data protection have added complexity to the negotiations.

A successful FTA would significantly boost trade and investment, creating new opportunities for businesses and contributing to economic growth on both sides. Total trade between the two entities surpassed $200 billion in 2023.