The Free Trade Agreement (FTA) between the EU and India does not provide for any exceptions to the cross-border Carbon Adjustment Mechanism (CBAM). This was confirmed by the European Commission, Argus Media reports.
As the chief speaker of the European Commission, Paula Pinho, noted, the EU does not undertake any obligations to change the CBAM or provide India with a more favorable regime. She added that the conditions under the mechanism would not be more favorable for this country than for others.
Pinho also stressed that the FTA agreement has a whole section dedicated to climate change and decarbonization, and the parties will also cooperate on the latter issue.
Another senior EU official, as noted by the agency, said that the CBAM issue is one of the most controversial issues related to steel and cars. During the negotiations, India initially took a "very radical" position on the mechanism, but the agreement opens up the possibility for a "technical dialogue" on it.
The parties have committed to launch a platform on climate action in the first half of this year. It is also planned to allocate 500 million euros of support from the European Union over the next two years to assist India in efforts to mitigate the effects of greenhouse gas emissions.
According to Reuters, citing a European official, during the negotiations, India expressed concern that the EU might offer the United States benefits under the trade agreement. Another noted that the block refused to change the fee or provide Indian companies with more flexible CBAM rules. At the same time, the EU is obliged not to provide the second countries with more favorable treatment than India.
EU legislation already suggests that the bloc cannot grant special treatment for a cross-border carbon adjustment mechanism to certain countries. India has been critical of the European CBAM since its announcement in 2021.
As for steel, India will receive a duty–free quota for exports of steel products to the EU in the amount of 1.6 million tons, about half of its annual shipments to the region.
