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The Department of Commerce, Ministry of Commerce & Industry held an awareness session on the European Union's Carbon Border Adjustment Mechanism (CBAM) for exporters at Vanijya Bhawan, New Delhi, jointly with the National Accreditation Board for Certification Bodies (NABCB) and the Engineering Export Promotion Council (EEPC).
Around 100 participants, including exporters and industry stakeholders, were taken through the CBAM framework — which products it applies to, what obligations fall on exporters, how embedded emissions are calculated, and what data collection, reporting, accreditation and verification require.
Practical case studies covered the iron and steel and aluminium sectors, two of the six CBAM-covered product groups and among India's most exposed exports to the EU.
Joint Secretary Amit Verma said the Department remains engaged with industry on practical and workable solutions; NABCB CEO N. Venkateswaran stressed a credible accreditation and verification ecosystem for emissions data, and EEPC Chairman Pankaj Chadha flagged the need for emissions data from suppliers down the value chain.
The session matters because CBAM left its reporting-only transitional phase on 31 December 2025 and entered its definitive regime on 1 January 2026, when compliance obligations began to bite for EU importers of Indian goods.
Inside the EU, producers of cement, steel, aluminium, fertilisers, electricity and hydrogen must buy allowances under the EU Emissions Trading System for the carbon they emit, which raises their costs. If imports from countries without an equivalent carbon price were let in freely, EU production would simply relocate to those countries and global emissions would not fall — the problem known as carbon leakage. CBAM closes that gap by charging imports for the carbon emitted while making them. 'Embedded emissions' is the technical heart of it: the greenhouse gases released during the production of a tonne of imported steel or aluminium, which the exporter must measure and document and which an accredited verifier must confirm. Under the definitive regime the EU importer declares those embedded emissions and surrenders a matching number of CBAM certificates whose price tracks the EU carbon price. For an Indian exporter the obligation is indirect but real: the EU buyer needs verified emissions data, and a supplier who cannot produce it becomes the expensive one to buy from.
Simple Analogy: It works like a customs duty priced not by the value of the goods but by the carbon burnt to make them — so a cleanly made tonne of steel walks through the gate cheaply and a carbon-heavy one pays at the border.
EU Emissions Trading System launched — the world's first international emissions trading system, on a cap-and-trade design.
Regulation (EU) 2023/956 adopted, establishing the Carbon Border Adjustment Mechanism.
India notifies its own Carbon Credit Trading Scheme under the Energy Conservation (Amendment) Act, 2022.
CBAM transitional phase begins — quarterly reporting of embedded emissions, no financial obligation.
Transitional phase ends.
CBAM definitive regime takes effect; compliance and certificate obligations begin for EU importers.
India and the European Union conclude their Free Trade Agreement after nearly two decades of negotiation, subject to ratification.
Department of Commerce holds the CBAM awareness session for exporters at Vanijya Bhawan with NABCB and EEPC.
Sales of CBAM certificates begin on the EU's central platform, covering emissions from 2026 imports.
First annual CBAM declaration and certificate surrender deadline.
A constituent board of the Quality Council of India that accredits certification, inspection and validation-and-verification bodies against international standards. For CBAM it matters because emissions data must be checked by accredited verifiers before an EU buyer can rely on it.
The apex national body for quality, accreditation and conformity assessment, set up in 1997 as an autonomous non-profit through a public-private partnership between the Government of India and industry associations ASSOCHAM, CII and FICCI; it functions under the administrative aegis of DPIIT and NABCB is one of its constituent boards.
The export promotion council for India's engineering sector, set up in 1955 under the Ministry of Commerce. Engineering goods include the iron, steel and aluminium products at the centre of CBAM exposure, which is why EEPC co-hosted the session.
Administrator of India's Carbon Credit Trading Scheme and therefore of the compliance side of the Indian Carbon Market. The National Steering Committee for the Indian Carbon Market that oversees it is co-chaired by the Ministry of Power and the Ministry of Environment, Forest and Climate Change.
Establishes CBAM, sets the covered product groups and creates the two-stage design — a reporting-only transitional period from 1 October 2023 to 31 December 2025, followed by the definitive regime from 1 January 2026 under which authorised declarants surrender CBAM certificates against declared embedded emissions.
India's enabling law for a domestic carbon market. Section 14AA is the provision under which the Ministry of Power notified the Carbon Credit Trading Scheme on 28 June 2023, creating India's first mandatory carbon market.
Establishes the Indian Carbon Market and succeeds the Perform, Achieve and Trade (PAT) scheme. As of mid-2026 close to 490 entities across seven sectors carry legally binding targets under its compliance mechanism, with the Bureau of Energy Efficiency as administrator. A functioning domestic carbon price is India's structural answer to CBAM: carbon already paid at home is the basis on which an exporter argues against paying again at the EU border.
| Aspect | EU Emissions Trading System | EU CBAM | India's Carbon Credit Trading Scheme |
|---|---|---|---|
| Started | 2005 | Regulation adopted 10 May 2023; definitive regime from 1 January 2026 | Notified 28 June 2023 |
| Applies to | Installations inside the EU across power, manufacturing and aviation | Imports into the EU of six product groups | Obligated entities in energy-intensive sectors within India |
| Instrument | EU Allowances (1 EUA = 1 tonne of CO2 equivalent) under a declining cap | CBAM certificates surrendered against declared embedded emissions | Carbon credit certificates traded under a compliance mechanism, plus an offset route |
| Legal basis | EU climate legislation; currently in Phase 4 (2021-2030) | Regulation (EU) 2023/956 | Section 14AA of the Energy Conservation (Amendment) Act, 2022 |
| Administered by | European Commission with member states | European Commission and national competent authorities | Bureau of Energy Efficiency, under a steering committee co-chaired by the Ministry of Power and MoEFCC |
| Purpose | Cap and reduce domestic emissions at least cost | Prevent carbon leakage by pricing imported carbon at the border | Create a domestic carbon price and market, succeeding the PAT scheme |
India and the EU concluded their FTA on 27 January 2026 after nearly two decades of negotiation, raising trade liberalisation coverage to 96.6 percent for India and 99.3 percent for the EU. The agreement is not yet legally binding and awaits ratification. Tariff concessions won in an FTA can be offset by a carbon charge at the same border, which is why CBAM ran alongside the FTA talks as a live Indian concern.
India's carbon-pricing history runs from the Perform, Achieve and Trade scheme — an energy-efficiency certificate mechanism — to the Carbon Credit Trading Scheme of 2023, which converts it into a mandatory carbon market. Questions frequently pair the enabling law, the Energy Conservation (Amendment) Act, 2022, with its administrator, the Bureau of Energy Efficiency.
NABCB accredits the bodies that verify claims, and QCI is its parent. Non-tariff measures in global trade — carbon data, sustainability claims, product certification — all ultimately run on accreditation, which is why a climate regulation produced a session hosted by an accreditation board.
Carbon leakage is the reason CBAM exists, and the objection to CBAM rests on common but differentiated responsibilities. Both concepts are standard environment-syllabus material and are best learnt against a concrete instrument like this one.
GS Paper 3 > Environment > Climate change and carbon pricing; GS Paper 2 > International Relations > India and the EU
General Awareness > International trade and economic institutions
General Awareness > Economy and international organisations
General Awareness > Current economic affairs
Carbon pricing has become a recurring theme across UPSC Prelims and Mains and in banking general awareness; CBAM in particular returns every time an EU compliance deadline passes, and the next ones fall in February and September 2027.
An EU measure under Regulation (EU) 2023/956 that charges imports of carbon-intensive goods for their embedded emissions, so that imports face a carbon cost comparable to that borne by EU producers under the EU ETS.
The greenhouse gases released during the production of an imported good, which must be calculated, reported and verified under CBAM.
The shifting of production, and therefore emissions, from a jurisdiction with a carbon price to one without it — the risk CBAM is designed to counter.
The world's first international emissions trading system, launched in 2005 on a cap-and-trade design in which one EU Allowance permits one tonne of CO2 equivalent; now in Phase 4, 2021-2030.
India's first mandatory domestic carbon market, notified by the Ministry of Power on 28 June 2023 under Section 14AA of the Energy Conservation (Amendment) Act, 2022, with the Bureau of Energy Efficiency as administrator.