With the European Union (EU) offering concessions to the United States on contentious climate linked trade measures India is preparing to demand similar treatment in the next round of negotiations on the India EU trade deal scheduled in Brussels next month.
At the heart of the talks lies the EU Carbon Border Adjustment Mechanism (CBAM) a carbon tax set to take effect in January 2026. The measure will require importers of carbon-intensive goods, such as steel, cement, and aluminium, to pay a levy reflecting the carbon cost of production. While Brussels argues that CBAM ensures a level playing field for EU industries already subject to strict carbon rules many developing economies see it as discriminatory and protectionist.
According to a senior Indian government official, New Delhi will highlight how the EU softened its stance for Washington and press for parallel concessions for Indian exporters. “We cannot allow our industry to be placed at a disadvantage when others are being accommodated,” the official said.
India’s concerns
India fears that CBAM could erode the benefits of the proposed free trade agreement with the EU particularly in sectors where Indian exporters hold strong positions. Officials argue that compliance costs could rise sharply, undermining competitiveness in Europe.
Apart from CBAM New Delhi is also concerned about the EU’s deforestation regulation, which requires companies to prove that products such as coffee, palm oil, and leather are not linked to deforestation. India sees this as a trade barrier and has been pushing for more flexibility in implementation timelines.
Global backdrop
Negotiations on climate trade rules have become one of the toughest areas in India-EU talks. The EU concessions to the US followed Washington persistent pushback, especially over CBAM and deforestation-linked measures. Brussels agreed to phased approaches and limited exemptions for American firms, moves that India sees as precedent-setting.
With climate-linked trade measures now central to global commerce the Brussels talks will be crucial in determining how developing economies like India balance climate responsibilities with their export ambitions.
While EU officials maintain that CBAM is non-negotiable in principle, Indian negotiators believe that diplomatic leverage and trade-offs in other areas of the deal could open space for compromise.