CBAM and EU Deforestation Rules: India’s Concerns
Why in the news
The European Union signalled that India should not expect relaxations on the Carbon Border Adjustment Mechanism (CBAM) or the Deforestation Regulation. PM Modi was expected to raise the issue with Commission President Ursula von der Leyen during her February 27-28 India visit.
CBAM facts
- A carbon tax on imports into the EU to push cleaner industrial production; currently in a transitional phase, fully effective from January 1, 2026.
- EU calls it a fair measure against carbon leakage and WTO-compliant, with no country exemptions.
- Hits Indian steel and aluminium exports; EU goods entering India under the coming FTA would be exempt, creating an imbalance.
Deforestation Regulation
| Entity | Compliance date |
|---|---|
| Large and medium companies | December 30, 2025 |
| Micro and small enterprises | June 30, 2026 |
- Goods must not come from land deforested after December 31, 2020.
- Could curb exports of palm oil, soy, coffee and timber products.
India’s position
- CBAM is a process-based tariff violating WTO principles.
- Seeks protective clauses in the India-EU FTA and a longer transition period.
- Countries such as China and India call CBAM a “disguised trade barrier”.
Exam angle
- CBAM full rollout: January 1, 2026.
- Forum cited: WTO.