The country seeks to provide a mechanism for resolving these issues in a free trade agreement

India is concerned that the UK may impose a tax on imports of carbon-intensive goods such as steel and wants the planned free trade agreement (FTA) to include a mechanism to address these issues. Reuters reports this with reference to Indian sources.

Earlier this year, the United Kingdom initiated internal consultations on measures such as a potential cross-border carbon tax, following the example of the European CBAM.

Now India wants the planned free trade agreement to include provisions that would oblige Britain to hold bilateral consultations with New Delhi in the event of a CBAM-like measure, Indian officials told the agency. In this way, they are trying to exclude a new tariff barrier that may arise in the future.

However, the sources note that the British side considers this request “unfair” since no decision has been made to introduce such a measure.

The UK plans to introduce a tax on imports of carbon-intensive goods in 2026, when the CBAM finally comes into force in the European Union. This way, the country will avoid the risk of redirecting carbon-intensive products to the British market, which will be subject to taxation in the EU.

As GMK Center reported earlier, India will not accept any unfair taxes or levies on steel imposed by the EU under the CBAM. According to Commerce Minister Piyush Goyal, the country has discussed the issue with the EU and will oppose CBAM in the WTO.