EU’s proposed CBAM expansion may impact Indian exporters: GTRI

The European Union is planning an expansion of its Carbon Border Adjustment Mechanism (CBAM) and the move could increase carbon tax costs on Indian manufactured exports to Europe, think tank GTRI said on Thursday.

It said that Indian exporters selling into Europe may need to accelerate emissions accounting, supply-chain traceability, and decarbonisation investments to remain competitive in one of the country’s key export markets.

In a draft report issued on April 10, 2026, the European Parliament’s Committee on the Environment, Climate and Food Safety (ENVI) proposed five major changes to the CBAM regime.

The changes include extending CBAM to around 180 additional steel- and aluminium-based manufactured products from January 1, 2028; and tightening carbon accounting rules for scrap-based production by including emissions from pre-consumer scrap, the Global Trade Research Initiative (GTRI) said.

It also includes examining expansion of the mechanism to indirect emissions from electricity use across more sectors. “Together, these steps would turn CBAM from a tax mainly on steel and aluminium raw materials into a much wider carbon tax covering manufactured industrial goods,” GTRI Founder Ajay Srivastava said.

CBAM is the EU’s border carbon tax that charges importers for emissions embedded in goods produced outside Europe.

It effectively places a carbon price on foreign manufacturers selling into the EU.  The mechanism acts as a climate-linked trade barrier on carbon-intensive imports.

He said that the proposed expansion would bring many new products under CBAM, including fabricated metal products, tubes, pipes, fasteners, structural components, machinery parts, aluminium containers, and other semi-finished and finished engineering goods.

The EU has not yet published product details, but the proposal shows that the levy is moving deeper into the manufacturing value chain, he added.

“The European Union is planning a major expansion of its CBAM. This move could sharply increase carbon tax costs on Indian manufactured exports to Europe,” Srivastava said.

At present, CBAM applies to imports of iron and steel, aluminium, cement, fertilisers, hydrogen, electricity, and selected steel/aluminium products.

From January 2028, Indian exporters of engineering goods, auto components, fabricated metal products, machinery, aluminium manufactures, and other industrial goods may increasingly face a carbon tax when exporting to Europe, he cautioned.