The European Union is at an interesting crossroads with its Go-Green movement in the industrial arena. The Carbon Border Adjustment Mechanism (CBAM) is a predominant step toward its ambition to cut emissions by 2030 by 55 percent in comparison with 1990 levels. One step further, Europe aims to become the world’s first climate-neutral continent by 2050. CBAM, which is in its transitional period (starting from 1 October 2023), has the potential to impact the dynamics of the continent’s trade relationship with countries like India.

The introduction of the CBAM has a significant impact on businesses importing goods into the EU.

The new rules will initially affect goods imported from carbon-intensive countries; the specified products include goods within the cement, electricity, fertilizers, aluminum, iron, steel and hydrogen sectors, as well as some upstream and downstream products (mainly iron, steel and aluminum). CBAM is expected to have a significant impact on India's exports, particularly for iron and steel, aluminum, cement, and fertilizers.

CBAM applies to imports of specified goods, excluding those that are part of or associated with the EU Emissions Trading System (EU ETS), such as Iceland, Norway, Liechtenstein, Switzerland, and five other minor territories. Following the implementation of the CBAM, the European Commission intends to broaden its scope to encompass all sectors covered by the EU ETS by 2030. Europe has an ever-increasing number of Indian entrepreneurs who endeavor to kindle their home connections and ignite trade channels. It’s going to be a significant challenge for importers in the continent. This special yearly issue is dedicated to Indian-origin business leaders in Europe.