Carbon Border Adjustment Mechanism (CBAM) is a key component of the European Union’s (EU) European Green Deal, aimed at preventing “carbon leakage” and ensuring fair competition between EU industries and foreign producers subject to different climate regulations.

Sectors Covered under CBAM

• Cover high-emission sectors like cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen.

Concerns for India 

• Impact on Exports: Carbon-intensive Indian exports may become less competitive in the European market.
• Small and medium Enterprises: Smaller firms may face difficulty in measuring, verifying and reporting product-level emissions.
• Administrative Burden: Indian exporters need reliable systems for carbon accounting, emissions verification and documentation.
• Developmental Concerns: Developing countries argue that they should not face the same obligations as historically high-emitting developed economies.
• Question of Carbon Sovereignty: India may lose revenue if carbon-related charges are collected by the EU rather than through an Indian carbon-pricing system.
• Risk of Protectionism: India argues that environmental objectives could be used as a justification for protecting European industries.

Source: The Hindu