Congress Flags EU Carbon Tax Impact, Urges India-EU FTA To Address Export Costs

The Congress on Thursday flagged concerns over higher export costs arising from the European Union’s carbon tax, urging that the India–EU Free Trade Agreement (FTA), expected to be concluded later this month, address what it termed an “unacceptable” non-tariff barrier.

According to PTI, Congress general secretary Jairam Ramesh said the long-pending India–EU FTA is reportedly set to be finalised later this month, even as Indian exporters face new levies under the EU’s Carbon Border Adjustment Mechanism (CBAM).

Beginning Thursday, Indian steel and aluminium exporters to the 27-member European Union will be required to pay a carbon tax under the CBAM, Ramesh said in a post on X. “In FY 2024-25, our exports of steel and aluminium to the EU averaged USD 5.8 billion — having already fallen from USD 7 billion in the previous year as EU importers began preparing for the introduction of the CBAM,” he said.

PTI reported that Ramesh cited estimates by think-tank Global Trade Research Initiative (GTRI), which suggest that several Indian exporters may be compelled to reduce prices by 15–22 per cent so that their EU importers can use that margin to pay the carbon tax.

“In addition, the documentation requirements call for meticulous accounting for and reporting of carbon emissions that are adding further costs to Indian exporters,” Ramesh said, according to PTI.

He added that “any India-EU FTA that does get finally signed must account for this unacceptable non-tariff barrier,” reiterating the Congress’s position that the issue needs to be factored into the trade agreement.

(With inputs from PTI)