The European Union (EU) is unlikely to offer India any concessions on its carbon-border levy and Deforestation Regulation. It is expected to be one of the main topics to be discussed during the visit of European Commission President Ursula von der Leyen to New Delhi from February 27 to 28, along with 21 EU country commissioners.
A senior EU trade official has described India’s complaints about the Carbon-Boundary Adjustment Mechanism (CBAM) as “illegitimate,” but the bloc wants to hear them. The CBAM, which is to begin on January 1, 2026, is a carbon tax on imported products to promote environmentally friendly industrial practices. On the other hand, the Deforestation Regulation, which comes into effect on December 30, 2024, for large companies and June 30, 2026, for small enterprises, is a provision that establishes that products imported into the EU must not be derived from land deforested after December 31, 2020.
These policies have been opposed by India and other countries including China on the grounds that they are trade barriers masquerading as carbon emission reduction policies. Indian exports may be most affected since steel and aluminum products, for instance, could be subjected to high carbon charges under CBAM.
Srivastava Ajay, former Indian Trade Service officer and author of the Global Trade Research Initiative, pointed out the imbalance in trade advantages. After the implementation of CBAM and the Free Trade Agreement (FTAs), EU products will be able to enter India without paying duties while Indian exports will be paying a price for carbon in the European market. He also pointed out that this may be against the World Trade Organization (WTO) regulations even as the EU argues that the policies are WTO compatible.
India has advocated for a extended time frame to lessen the effects of these regulations on the economy, but the EU appears to have its sights set on the time frame.
