India-EU FTA Faces Hurdles Amid EU Carbon Tax Concerns

The Congress has raised alarms about the increased export costs stemming from the EU's carbon tax, urging that the India-EU Free Trade Agreement considers this non-tariff barrier. Indian steel and aluminum exporters face challenges as the EU introduces the Carbon Border Adjustment Mechanism, affecting export prices and documentation requirements.

The Congress has voiced serious concerns over escalating export costs attributed to the European Union's carbon tax. As India moves toward finalizing a Free Trade Agreement with the EU, Congress insists that this 'unacceptable' non-tariff barrier be addressed.

According to Congress general secretary Jairam Ramesh, the expected signing of the India-EU Free Trade Agreement later this month coincides with the implementation of the EU's Carbon Border Adjustment Mechanism (CBAM). From Thursday, Indian steel and aluminum exporters to the EU's 27 member nations will incur a carbon tax, a cost implication that Ramesh argues should be factored into the trade discussions.

Highlighting data from think-tank GTRI, Ramesh revealed that Indian exporters might need to cut prices by up to 22% to accommodate the carbon tax burden on their EU importers. He also noted additional expenses related to meticulous carbon emissions documentation, further weighing on exporters. The Congress maintains that the India-EU FTA must address these challenging trade barriers before being finalized.

(With inputs from agencies.)