The EU-India trade agreement does not provide for an exemption from CBAM

The Free Trade Agreement (FTA) between the EU and India does not provide for any exemptions from the Cross-Border Carbon Adjustment Mechanism (CBAM). This was confirmed by the European Commission, according to Argus Media.

As EC chief spokeswoman Paula Pinho noted, the EU is not making any commitments to change the CBAM or to grant India a more favorable regime. She added that the regime for this country under the mechanism will not be more favorable than for others.

Pinho also noted that the FTA agreement has an entire section devoted to climate change and decarbonization, and the parties will also cooperate on the latter.

Another senior EU official, the agency notes, said that the CBAM issue is one of the most contentious, along with steel and cars. During the negotiations, India initially took a “very radical” position on mehanzim, but the agreement opens up the possibility for a “technical dialogue” on it.

The parties have committed to launching a platform on climate action in the first half of this year. Over the next two years, €500 million in EU support is also expected to be allocated to assist India’s efforts to mitigate the effects of greenhouse gas emissions.

According to Reuters, citing one of the European officials, during the negotiations, India expressed concern that the EU might offer the US concessions as part of the trade agreement. Another noted that the bloc refused to change the levy or offer Indian companies more flexible CBAM rules. However, the EU has pledged not to give other countries more favorable treatment than India.

EU legislation already stipulates that the bloc cannot grant special treatment to certain countries with regard to the cross-border carbon adjustment mechanism. India has criticized the European CBAM since its announcement in 2021.

With regard to steel, India will receive a duty-free export quota for metal products to the EU of 1.6 million tons, which is approximately half of its annual supplies to the bloc.

It should be recalled that on January 27, the European Union and India concluded negotiations on a historic and ambitious free trade agreement (FTA). The agreement is expected to double exports of goods from the bloc to India by 2032 by eliminating or reducing tariffs on 96.6% of European supplies to the Indian market. The European Union will eliminate or reduce tariffs on 99.5% of goods imported from India over seven years, according to the country’s Ministry of Commerce and Industry.