CBAM concessions to others will also apply to India: FTA
The EU has not provided any concessions to India on its carbon regulations in the trade pact, but has agreed that any relaxations granted by the 27-nation bloc to other countries under the CBAM provisions will automatically extend to Indian exporters, an official said on Tuesday.The free trade agreement also provides for a rebalancing of rights in case the EU’s measures under this regulation impair pact benefits to Indian firms or if it fails to establish the grounds for the same.Carbon Border Adjustment Mechanism (CBAM) or the carbon tax, which came into effect on January 1, was one of the contentious issues of the trade pact between India and the European Union (EU).
Under the mechanism, the EU will impose a carbon tax on goods such as steel, aluminium, fertiliser and cement as they emit carbon beyond a specified threshold during manufacturing. Presently, the tax applies to steel and aluminium products.“CBAM is a difficult issue. It is a horizontal regulation without any flexibility for anyone. However, there is one commitment that any flexibility given to any other country in the future would be given to India also. We have nudged them,” the commerce ministry official said. As per the agreement, any flexibility or concession that the EU will give to any country in future under CBAM regulation will automatically be extended to India, the commerce ministry official said. The two have also agreed to increase technical cooperation on the recognition of carbon prices and verifiers, as well as financial assistance and targeted support to reduce greenhouse gas emissions and to comply with emerging carbon requirements.
“We have nudged them that we don’t want to come back to negotiate with you. If you extend any flexibility... Please give us that. So, that is part of the FTA,” the official said.Another official said there is a non-violation clause to protect India’s interests against any new measures.“We do have a non-violent clause also in the agreement. If a new measure comes later, which nullifies concessions to us under the FTA, we do have consultation rights, and if the consultation does not yield any result, we do have re-balancing rights,” the official added.
India has kept a similar option under the India-Uk trade agreement also.The pact also provides for the setting up of a technical group, which will help provide accreditation to Indian verifiers for carbon pricing.“...Our industry needs to get its carbon footprint verified, and verified by verifiers who are accredited by them. Today, all verifiers that are accredited by them are in Europe. So, that technical working group will enable accreditation of local Indian verifiers also,” the official said.
It will also enable India to understand their process of calculating carbon footprint, so that “we can educate and bring capacities in India also,” the official added. If India brings in any carbon trading or pricing regime in future, the EU will abide by that.“This technical working group will ensure that how this can also be plugged in and be a part of CBAM. So, this will never avoid us,” the commerce ministry official said.Under the FTA, the two sides will also work together to reduce carbon emissions in the industrial sector in India.
“And for that, they will provide technical assistance, technology support and even financial tools wherever feasible,” the official said, adding that it “is also part of the agreement. This cooperation has also been committed as a part of the FTA”.
