Sustainability vs Survival: India's Export Sector Faces EU's Carbon Challenge

Economic Survey warns that the European Union's Carbon Border Adjustment Mechanism (CBAM) could significantly impact India's exports, potentially raising costs by 20-35% for key sectors like steel, aluminum, and cement. Finance Minister Nirmala Sitharaman has termed the tax a "unilateral" and "arbitrary" trade barrier that could harm Indian industries. Starting January 2026, the EU will impose carbon levies on imports, challenging India's export market and economic interests.

Key Impact:
- 26.6% of India's iron, steel, and aluminum exports go to the EU
- Potential export cost increase of 20-35%
- Affects goods worth approximately USD 8 billion annually
Source: drishtiias, Hindustan Times