Exports to face UK CBAM even after FTA

 

India was unable to secure an exemption from the UK’s carbon tax in the free trade agreement, a move that will impact carbon-intensive exports to Britain, said think tank Global Trade Research Initiative (GTRI). The UK government in December 2023 decided to implement its Carbon Border Adjustment Mechanism (CBAM) starting in 2027. By not securing a carve-out or exemption clause on CBAM (carbon border adjustment mechanism), India lost a vital opportunity to protect its carbon-intensive exports. The UK, after the European Union (EU), will be the second economy to implement CBAM. The tax will initially focus on sectors like iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement, and could range from 14 to 24%. An official has said that New Delhi has preserved its right to retaliate or rebalance concessions if future measures impact exports, as per a report.

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