EU-India Strengthen Collaboration on CBAM

The European Union has initiated new talks with India after deciding to implement the Carbon Border Adjustment Mechanism (CBAM) on imported steel and aluminum, aiming to resolve ongoing trade issues.

European Commission Secretary-General Gerassimos Thomas led a delegation to New Delhi in early July to discuss various taxation and customs matters, including CBAM. The visit aimed to synchronize decarbonization efforts between Indian and European industries and address the challenges faced by Indian companies under CBAM.

Thomas met with Indian government officials and steel industry representatives, highlighting Europe’s commitment to importing low-carbon products to support global decarbonization and ensure fair treatment of imported goods. This mechanism will be phased in gradually, providing predictability for investors and businesses.

Thomas praised India’s economic decarbonization plans, emphasizing the shared commitment of the EU and India to collaboratively address environmental issues. The EC delegation’s visit offered a platform to discuss the implementation challenges of CBAM for Indian companies, particularly focusing on the impact on SMEs.

Technical meetings with India’s Ministry of Energy will continue, with a CBAM transition assessment report due to be submitted to the European Council and Parliament by the end of next year. This report will be available publicly for Indian industries and authorities to review and comment on.

Both parties also expressed mutual interest in cooperating on carbon trading markets, pricing mechanisms, energy efficiency, renewable energy, and clean technology. The EU plans to consult with major Asian trading partners, including South Korea and Japan, on CBAM, with both countries committed to addressing related uncertainties.

Last month, trade talks in New Delhi aimed at mitigating the impact of expanded safeguards and tariffs on certain steel imports did not result in an agreement. India had sought equivalent concessions and trade compensation from the EU but was unsuccessful.

With upcoming EU import restrictions on Indian steel products, there was speculation that India might retaliate through WTO litigation and trade reprisals. However, the recent EC delegation visit, which initiated discussions on various steel-related trade issues, suggests a potential easing of trade conflicts and the start of new negotiations.

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