| 8 December 2023, Friday |

European Union will tackle India’s concerns on carbon tax, official says

The head of the EU’s climate policy said on Friday that the club has informed New Delhi that it will undertake bilateral discussions to address its concerns over levies proposed on imports of high-carbon products like steel and iron ore from India.

In an effort to achieve net-zero greenhouse gas emissions by 2050, the 27-nation EU last month agreed the first-ever plan to impose a tax on imports of high-carbon goods starting in 2026, including aluminum, cement, power, fertilizers, and hydrogen.

Indian industry officials estimate that nearly $8 billion of exports such as steel and iron ore would face tariffs initially, but all goods exported to the EU will be covered by 2034.

The EU official, Frans Timmermans, said he was confident the issue would be resolved bilaterally and it was too early to worry about the impact of penalties on exports from India.

“If CBAM has undesired results then we can correct it,” the climate policy chief, who is on a two-day visit to India, told reporters after meeting industry leaders and government officials the previous day.

He was referring to the Carbon Border Adjustment Mechanism (CBAM) through which the EU plans to impose the steep tariffs, which range from 20% to 35%.

The move prompted India to warn it would complain to the World Trade Organisation while seeking to resolve the issue through talks.

Both sides would study the effects of the new mechanism during a scrutiny period for exporters from December, Timmermans added.

“It is absolutely not our intention to create a situation that could be perceived as protectionist,” he said, ruling out any violations of WTO rules.

Earlier industry leaders queried the EU climate chief on relaxation of rules for small exporters and the prospect of “technology transfer” to achieve climate goals.

  • Reuters