India to raise at WTO EU’s plan to levy carbon tax on imports

Subject: International Relations

Section : Groupings

Concept :

With 15 per cent of India’s exports going to the EU, the proposed CBAM could put Indian exporters in a spot.
India is likely to raise the issue of carbon tax, to be imposed by the European Union, in the WTO.
According to senior officials of the Department of Commerce (DoC), India will raise the issue of CBAM (carbon border adjustment mechanism) in all appropriate fora of the WTO.
The said taxation will be implemented in 2026, and the transition period will begin in 2023, when importers in the EU will have to report (every quarter) the related emissions on goods brought in.

About Carbon Border Adjustment Mechanism

The European Union has proposed a policy called the Carbon Border Adjustment Mechanism — to tax products such as cement and steel that are extremely carbon intensive, with effect from 2026.
It is a duty on imports based on the amount of carbon emissions resulting from the production of the product in question.
As a price on carbon, it discourages emissions. As a trade-related measure, it affects production and exports.
This measure makes it necessary for carbon-intensive industries to comply with stricter emission standards.

Opposition :

BASIC, a group constituting Brazil, India, South Africa and China, and therefore large economies that are significantly dependent on coal, has for several years voiced common concerns and reiterated their right to use fossil fuel in the interim during their countries’ eventual transformation to clean energy sources.
They jointly stated that carbon border taxes, that could result in market distortion and aggravate the trust deficit amongst parties, must be avoided.