NEW DELHI: The government is discussing the possibility of imposing carbon tax on some of the imports into the country at a time when Indian exports are facing the latest environmental hurdle from the European Union, with the UK and other developed countries expected to join the club in the coming years.
The Carbon Border Adjustment Mechanism (CBAM), which kicks in from January 2026, could result in an additional burden of at least 8-9% on certain products, with the levy likely to be as high as 25-30% in certain other categories. The tax will negate any benefits that may accrue to India from the free trade agreement (FTA) with the trading bloc that is currently under discussion.
