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India and EU and CBAM Implementation
Context :
India and the European Union (EU) agreed to work together to address the challenges posed by the implementation of the Carbon Border Adjustment Mechanism (CBAM), particularly concerning small and medium enterprises (SMEs).
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- The issue was a key topic of discussion during the second meeting of the India-EU Trade and Technology Council (TTC).
- A joint statement released after the meeting stated, “Both sides discussed the challenges arising out of CBAM implementation, particularly for SMEs, and agreed to continue addressing them.”
Understanding CBAM and Its Impact on Trade
- CBAM is an EU regulatory tool designed to impose a “fair price” on carbon emissions generated during the production of imported goods.
- The mechanism aims to reduce carbon leakage by ensuring that imported products adhere to the same environmental standards as those produced within the EU.
- India has repeatedly raised concerns about CBAM and its potential economic implications.
- India has highlighted concerns on CBAM on multiple occasions and has taken note of modifications made by the EU to simplify certain aspects of the framework.
- We are currently examining these implications and hope that the concerns of developing countries are adequately addressed.
- Under CBAM, the EU will impose carbon taxes on imports of certain products, including cement, iron and steel, aluminium, fertilisers, electricity, and hydrogen, if their carbon emissions exceed a specified threshold.
- Experts have pointed out that CBAM could negatively impact the benefits India expects from its ongoing Free Trade Agreement (FTA) negotiations with the EU. India is also advocating for an exemption or special provisions for SMEs within the CBAM framework.
Strengthening Cooperation in Trade and Technology
- Apart from the ministerial meeting of the TTC, three working groups of the council convened to discuss key areas of collaboration.
- The working group on strategic technologies, digital governance, and digital connectivity explored joint research and development (R&D) opportunities in:
- Chip design and heterogeneous integration
- Sustainable semiconductor technologies
- Advanced technology development for process design kits (PDK)
- Both parties also committed to enhancing semiconductor supply chain resilience by promoting sustainable, secure, and diversified production capabilities.
- During the visit of European Commission President Ursula von der Leyen and a delegation of commissioners, a Memorandum of Understanding (MoU) was signed between the Bharat 6G Alliance and the EU 6G Smart Networks and Services Industry Association. The agreement aims to align R&D priorities, strengthen telecommunications security, and build resilient supply chains in the sector.
As India and the EU continue their engagement through the TTC, addressing trade and technological challenges will remain a priority, ensuring mutually beneficial economic and environmental cooperation.
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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH
