UK, EU carbon tax: Govt considers compensation for affected exporters

THE CENTRE IS EXPLORING a range of relief measures to soften the blow of the carbon tax introduced by the European Union (EU) and the UK, which includes offering compensation to exporters affected by the tax to help them remain competitive in the global markets, a government official told The Indian Express.

- RAVI DUTTA MISHRA

The carbon border adjustment mechanism (CBAM), or carbon tax, is expected to have an impact on India's iron, steel, and aluminium exports worth $8-$9 billion headed into Europe and the UK. But going forward, the CBAM has provisions to include more products with a high carbon footprint.

This could mean India faces a greater impact over the years.

"There are various options on the table to tackle carbon tax such as seeking longer transition time and repatriation of the duties. We are also looking at other collaborative mechanisms where we devise a way to come out with supportive measures to make the product more competitive. We are discussing and deliberating along these lines," said the official, requesting anonymity.

The CBAM kicked in on October 1 with carbon emissions reporting requirements on imports at the borders. But the EU will impose the actual tax from 2026. The period between 2023 to 2026 is known as the transition time.