India wants the European Union (EU) to repatriate revenue collected as a carbon tax from Indian exporters once the Carbon Border Adjustment Mechanism (CBAM) comes into effect. The repatriated proceeds would be used here to fund the country’s climate goals, officials involved in the talks said.
According to officials, a recent stakeholder meeting held by one of the key ministries considered calling for a waiver or exemption as part of Free Trade Agreement (FTA) negotiations.
repatriation of revenue
At a meeting earlier this week, India was said to be abiding by the United Nations Framework Convention on Climate Change (UNFCCC commitments). And a waiver or exemption from compliance with the CBAM is likely to be factored into ongoing FTA discussions. Otherwise, a repatriation of CBAM revenue is proposed.
“The EU should agree that revenue generated by the EU from imports to India be segregated and repatriated to India to use towards its climate goals,” an official reportedly said at the meeting. From now on, this revenue will flow into the EU budget to achieve the EU’s climate goals.
Officials say the UNFCCC allows both emissions reductions and carbon pricing to be on par with the EU; However, they point out that CBAM continues to “contravene WTO principles”. These do not allow product differentiation based on “embedded emissions” to be recognised.
“The EU is not looking for equivalence in emissions reductions, but for equivalence in prices,” the official said.
The European Commission has adopted the rules to implement the CBAM during its transition period, which will start on October 1 and “run until the end of 2025”.
In the transition phase of the CBAM, “traders only have to report the emissions associated with their imports subject to the mechanism without paying a financial adjustment.”
From January 1, 2026, EU importers will have to buy CBAM allowances corresponding to embedded emissions that are above the EU ETS benchmark levels. Currently, the price of such credits is set at around 85 euros per tonne of CO2, “which will gradually increase”.
Steel and aluminum exports are said to be among the hardest hit sectors after the CBAM reporting mechanism went into effect.
India’s previous demands
According to the official who was present at the stakeholder meetings, India’s demands so far include the exemption of the MSME sector from EU-CBAM (one that has likely been scrapped) and the linking of India’s carbon market (Carbon Credit Trading System), which is still The works – with EU – consists of CCTS and it includes procedural and technical harmonization. The CBAM Regulation provides for the possibility of an agreement with third countries to take CO2 pricing into account. Officials said carbon pricing in the Indian framework may not be on par with the EU; and therefore the benefits could be limited.
The company has also applied for EU accreditation of India’s accredited carbon verifiers for ’embedded emissions verification’. Such accreditation will bring cost advantages to Indian examiners. Currently only accredited verifiers according to EU 2018/2067 can verify greenhouse gas emissions. Here in India there are some subsidiaries of these EU certified auditors.
https://www.thehindubusinessline.com/economy/cbam-discussions-india-mulls-carbon-tax-repatriation-from-eu/article67280519.ece CBAM Discussions: India considers repatriation of carbon tax from EU