India brews its own carbon levy to hit back at EU imports

India is preparing the groundwork for its own carbon border tax to strike back against a similar move by the European Union (EU), two people aware of the discussions in the government said

- Ravi Dutta Mishra

New Delhi is peeved by the EU's move to link the environment with trade, though there were no such considerations while the 27-member bloc industrialized.

The finance and commerce ministries are discussing the contours of such a mechanism, particularly about measuring the carbon content in products imported from Europe, said one of the people cited above, both of whom spoke on condition of anonymity.

"We are working out the contours of how a carbon tax will work. Retaliation can be in two ways. One is to do something similar, for which we need to measure the carbon content in imports. The second option is to retaliate on something else, but that option is not being looked into. The first option requires a lot of work, and we are doing the homework," the person cited above said.

The second person added, "The (EU's) carbon border adjustment mechanism (CBAM) is just a customs duty by another name. Going by the logic behind this levy, we are also free to impose a tax on imports taking into account historic carbon emissions by them."