India-EU Trade Agreement: A Step Forward Despite Carbon Levy Tensions

India and the EU have concluded a trade agreement amid concerns over the EU's carbon border adjustment mechanism. Although India worries the levy could impact steel trade, the EU confirmed no changes to the levy but pledges equal treatment in its implementation. The deal includes emissions support for India.

A landmark trade agreement between India and the European Union was finalized on Tuesday, offering significant advancements despite existing tensions over the EU's carbon border tariff, which has been a point of contention for India.

The carbon border adjustment mechanism (CBAM), introduced by the EU in 2021, has drawn criticism from India, which fears it could impair its steel trade. The levy, which started applying to imports of steel, cement, and other high-carbon products this month, will remain unchanged, EU officials confirmed.

To address concerns, the EU and India agreed to engage in technical discussions about the levy and emphasized the commitment to fair treatment under the CBAM. Additionally, a provision of 500 million euros will aid India's emission reduction efforts, accompanied by a duty-free quota for Indian steel exports to the EU.

(With inputs from agencies.)