Finance Minister Sitharaman said – European Union’s proposed carbon tax is arbitrary, India’s exports to suffer loss

New Delhi| Finance Minister Nirmala Sitharaman said the European Union’s Carbon Border Adjustment Mechanism (CBAM) is unilateral and arbitrary. India’s exports will suffer after its implementation.

Sitharaman was addressing a summit. The European Union (EU) has decided to impose a carbon tax on seven carbon-intensive sectors, including steel, cement and fertilizer, that it imports from 1 January 2026, she said. Engineering goods will also come under its purview. She said, this is a border tax introduced by the European Union. Such steps create trade barriers.

She said that against this, India has expressed its concern to the European Union several times. The government is also considering ways to reduce transaction costs. This decision of the European Union will cause loss to Indian exporters, as Europe is one of the top export destinations for India.

Nirmala Sitharaman said, India’s total trade with the EU in 2023-24 was $137.41 billion, with imports at $61.48 billion and exports at $75.93 billion. However, she also said that it is very unlikely that India will face difficulty in finalizing the Free Trade Agreement (FTA) with the European Union due to CBAM. “We are moving towards achieving carbon emission reduction targets by 2030”, she said.