Indian exporters of iron and steel to the European Union may have to pay about €301 million (approximately ₹3,000 crore) in Carbon Border Adjustment Mechanism (CBAM) fees – the highest among all countries exporting similar products to the EU, an analysis by European non-profit think-tank Sandberg has found.
CBAM is a levy that European importers must pay if they buy products from countries whose production emits more carbon dioxide per tonne than equivalent goods manufactured within the EU.
An online calculator developed by Sandberg, made public on Thursday, estimates that Russia will face the next highest CBAM charges (€240 million), followed by Ukraine (€198 million) and China (€194 million).
The analysis further indicates that India’s total CBAM liability, covering exports of aluminium and cement in addition to iron and steel, stands at about €330 million, or roughly 1.05% of the value of all traded goods. However, the study also suggests that Indian exporters could earn higher revenues, estimated at €510 million, if they shift to cleaner technologies, resulting in a net cost reduction of around €180 million.
India has consistently opposed the CBAM, with industry bodies describing it as a “non-tariff barrier”. Commerce Minister Piyush Goyal said in July that if the EU implemented the CBAM , India would “retaliate with taxes of its own.”
Although India’s CBAM-exposed exports to the EU account for only 0.2% of the country’s GDP, iron and steel make up nearly 90% of these exports. The CBAM issue remains a key sticking point in the ongoing negotiations for a Free Trade Agreement (FTA) between India and the EU, which both sides hope to conclude within this calendar year.
New Delhi has argued that developed countries, as historic emitters, should bear a greater share of the global climate burden. India is preparing to mitigate CBAM’s impact through a domestic carbon trading system and aims to triple its renewable energy capacity by 2030.
India is the world’s third-largest carbon emitter, with the power sector, particularly coal, accounting for the bulk of emissions. Currently in its transitional phase, CBAM is expected to be fully implemented in January 2026 for imports of iron and steel, aluminium, cement, fertilizers, electricity, and hydrogen, with potential expansion to other sectors later. The mechanism allows exporters to deduct carbon costs already paid domestically to prevent double taxation.
Independent experts have said that CBAM could also present an opportunity for India. “If India implements its own carbon tax and keeps the revenue domestically, it can largely neutralise these downsides,” Joydeep Ghosh and Rajat Verma of the Centre for Social and Economic Progress said in a policy paper published in August. They added that such measures could help retain funds – around 1% of GDP by 2030 – for reinvestment in green initiatives, ensuring minimal impact on growth.
