India, EU to address CBAM concerns for MSMEs

India and the EU agreed to address challenges of the Carbon Border Adjustment Mechanism (CBAM) for medium, small and medium enterprises (MSMEs).

India and the European Union (EU) on Friday agreed to address the challenges arising out of implementation of the Carbon Border Adjustment Mechanism (CBAM) particularly for the small and medium enterprises.

The issue of CBAM came up in the second meeting of the India-EU Trade and Technology Council (TTC). “Both sides discussed the challenges arising out of CBAM implementation, in particular for the small and medium enterprises and agreed to continue addressing them,” a joint statement after the TTC meeting said.

CBAM is a EU tool to put a “fair price” on the carbon emitted during the production of goods.

“India has highlighted concerns on CBAM on a number of occasions and has noted the modifications EU has made in its framework to simplify some of its aspects. We are examining the implications of that and we hope concerns of developing countries are taken into account and addressed suitably,” Secretary (West) in the Ministry of External Affairs Tanmaya Lal said at a press conference.

Through CBAM the EU will tax imports of select products like cement, iron and steel, aluminium, fertilisers, electricity and hydrogen, for carbon emissions beyond a threshold. Experts say that CBAM can undermine gains that India may hope to receive from the FTA between the two sides. India is also seeking a carve out for small and medium enterprises in the CBAM framework.

Apart from the ministerial meeting of TTC, the three working groups of the council also met. In the working group on Strategic Technologies, Digital Governance and Digital Connectivity both sides agreed to explore joint R&D in the field of chip design, heterogeneous integration, sustainable semiconductor technologies, technology development for advanced processes for process design kit (PDK). They also agreed to ensure semiconductor supply chain resilience by developing sustainable, secure and diversified semiconductor production capabilities.

During the visit of European Commission President Ursula von der Leyen and college of commissioners a memorandum of understanding between the Bharat 6G Alliance and the EU 6G Smart Networks and Services Industry Association for aligning research and development priorities and creating secured and trusted telecommunications and resilient supply chains.

In the clean and green technologies working group both sides also agreed on joint research cooperation on recycling of batteries for electric vehicles (EVs), marine plastic litter, and waste-to-hydrogen. For research a budget of euro 60 million will be allocated and India and EU will contribute equally to it. Both sides agreed to explore cooperation on harmonising standards for EV charging infrastructure.

In the working group of Trade, Investment and Resilient Value Chains India and EU

expressed satisfaction with the progress made on Agri-food, Active Pharmaceutical Ingredients (APIs) and Clean Technologies. In the pharmaceutical sector, India and EU aim to enhance transparency and security in APIs supply chains by mapping vulnerabilities, promoting sustainable manufacturing, and establishing early warning systems to prevent disruptions.

From EU side Executive Vice-President for Tech Sovereignty, Security and Democracy Henna Virkkunen, Commissioner for Trade and Economic Security, Interinstitutional Relations and Transparency Maros Šefčovič and Commissioner for Startups, Research and Innovation Ekaterina Zaharieva co-chaired the TTC meeting. From the Indian side External Affairs Minister S Jaishankar; Commerce and Industry Minister Piyush Goyal and Minister for Electronics and Information Technology Ashwini Vaishnaw participated.

Keywords: CBAM Services India, CBAM Consultants India, CBAM Steel, CBAM Aluminium, Bangalore, Kolkata, Mumbai, Rajkot, Delhi, Punjab, Hyderabad

Source: Financial Express, February 28, 2025