Sitharaman criticizes the EU for penalizing India twice with a carbon price.
FM Sitharaman has raised her reservations over the CBAM, stating that she has informed European MPs that the CBAM will basically force India to pay for greening its own steel industry.
The European Union (EU) and India seem to be heading for a clash, with the continental bloc attempting to double-penalty the country with its carbon tax and Finance Minister Nirmala Sitharaman opposing the Carbon Border Adjustment Mechanism (CBAM).
According to the minister, both India and the EU are moving to greener businesses and investing in sustainable assets. In this context, she emphasized that penalizing India via CBAM is unjust, according to the Business Standard on September 18.
“Both your steel, which must be green, and my steel, which must also be green, are in transition mode.” We both invest in environmentally friendly assets. So, how fair is it if you’re penalizing us twice in the meantime? “Our displeasure with CBAM has been clearly communicated to them,” Sitharaman told the newspaper.
Beginning October 1, the CBAM will begin a transition period. During this phase, EU importers of carbon-intensive items such as cement, fertilizer, steel, and aluminum will be required to disclose their imports’ embedded emissions. They will not, however, be compelled to make any financial adjustments at this time. The transition period is an important element in the implementation of CBAM since it allows for the reporting and evaluation of emissions connected with imported items.
The EU’s 20 percent to 35 percent tariffs on high-carbon items are projected to hurt India’s exports, according to Reuters, citing a July announcement from the finance ministry. Senior government officials and steel industry representatives met earlier this month to discuss the implementation problems related with the EU’s decision to adopt a carbon price.
According to media accounts, the discussions centered on comprehending the effects of the carbon tax and identifying viable tactics for adapting to this new regulatory framework.
The CBAM will be fully implemented in January 2026, at which time a fee will be applied on imported items covered by the CBAM. According to the EU, the goal of CBAM is to create a fair price for the carbon emissions linked with the manufacturing of carbon-intensive commodities entering the EU.
According to the newspaper, the charge is meant to incentivize cleaner industrial production methods in non-EU nations, coinciding with the EU’s aims of boosting sustainability and lowering carbon emissions.
Sitharaman said that she has informed European MPs that the CBAM will effectively force India to pay for greening its own steel industry. She contended that this method penalizes India since it would have less financial resources to engage in its own green efforts after paying the carbon price.
The FM emphasized the importance of the EU taking New Delhi’s concerns into consideration, implying that if India’s issues are not sufficiently handled, other nations may not see the CBAM favorably.
“They cannot rip off other countries in order to green themselves, as if we are to be punished while they are not.” “In principle, the unacceptable authority with which this has been imposed on other countries has been rejected,” the minister was quoted as saying by the newspaper.