FM SITHARAMAN LASHES OUT AT EU CARBON TAX

Emerging economies worry about unilateral carbon border adjustments by developed countries, which may disrupt global trade and strain relations if seen as unfair to green industry transition

India and the European Union (EU) are locked in a growing dispute over the EU's Carbon Border Adjustment Mechanism (CBAM), with Indian Finance Minister Nirmala Sitharaman expressing strong disapproval of the measure. CBAM, set to enter a transition phase starting October 1, aims to impose tariffs on high-carbon goods imported into the EU to incentivize cleaner industrial production practices in nonEU countries and align with sustainability and carbon emissions reduction goals.

However, India argues that CBAM unfairly penalizes countries like India, which are in the process of transitioning to greener industries and making investments in sustainable assets.

CBAM is a significant part of the EU's efforts to combat climate change and ensure a level playing field for European industries that have to comply with stringent environmental regulations.

The mechanism is designed to address the issue of "carbon leakage," which occurs when companies in the EU relocate their production to countries with less stringent carbon regulations, resulting in higher emissions globally. By imposing tariffs on carbon-intensive products imported into the EU, CBAM aims to ensure that foreign producers also bear the car bon costs associated with their products, making it less attractive for EU companies to relocate for environmental reasons.