Engineering goods exporters seek mandate on carbon emission certificate under EU norms
Engineering goods exporters have sought a mandate requiring accredited, verified carbon-emission data from domestic raw-material suppliers, to help them comply with the European Union's Carbon Border Adjustment Mechanism (CBAM).
Concerns were raised that small and medium exporters could struggle to source authenticated emissions data from their supply chains in time for compliance.
It was noted that roughly 70% of India's engineering exports to the EU originate from Micro, Small and Medium Enterprises (MSMEs), which typically lack in-house capacity for emissions accounting and third-party verification.
The Engineering Export Promotion Council (EEPC India), which functions as the officially recognised CBAM support body for exporters under the Ministry of Commerce, has been coordinating awareness and readiness efforts across the export supply chain.
Carbon Border Adjustment Mechanism (CBAM)
CBAM is a European Union carbon-leakage prevention instrument, established under EU Regulation 2023/956, that imposes a carbon cost on select imports equivalent to what EU domestic producers pay under the EU Emissions Trading System (EU ETS). Its objective is to prevent "carbon leakage" — the relocation of carbon-intensive production to countries with laxer climate regulation — while incentivising cleaner production globally.
Since CBAM levies costs based on embedded emissions across the value chain (not just the final exporter's own factory), Indian engineering exporters cannot certify compliance unless their upstream raw-material suppliers (steel, aluminium producers, etc.) also generate accredited, verifiable emissions data — hence the demand for a domestic mandate.
CBAM's Impact on India's Trade and MSME Exposure
India's metals and engineering exports to the EU are structurally exposed to CBAM because steel and aluminium — both covered sectors — are key inputs. The EU is one of India's largest export destinations for engineering goods, and MSMEs form the bulk of this exporter base, making capacity-building and data-sharing mandates a trade-policy priority rather than a purely environmental one.
Key Details
- Government-industry engagement includes EEPC India's role as the Ministry of Commerce-recognised CBAM consultant, running structured EU-aligned compliance and reporting support for exporters.
- India has separately raised concerns about CBAM's WTO-compatibility at multilateral fora, arguing it functions as a unilateral trade barrier inconsistent with the principle of Common but Differentiated Responsibilities (CBDR) under the UNFCCC.
- Domestically, India's Carbon Credit Trading Scheme (CCTS), 2023, notified under the Energy Conservation Act, 2001 (as amended in 2022), and administered by the Bureau of Energy Efficiency (BEE), is the parallel domestic carbon market mechanism being developed, partly to create India's own verified emissions-accounting ecosystem.
The exporters' demand effectively asks the government to extend India's own emerging carbon-accounting infrastructure (verification protocols akin to CCTS) down to raw-material suppliers, so exporters have a ready, accredited data trail for EU compliance.
- CBAM definitive (financial) phase began 1 January 2026; certificate sales start February 2027; first surrender deadline 30 September 2027 (for 2026 imports).
- CBAM covers: iron & steel, aluminium, cement, fertilisers, hydrogen, ammonia, nitric acid, electricity.
- Import threshold for CBAM declarant registration: 50 tonnes/year of covered goods.
- About 70% of India's engineering exports to the EU come from MSMEs.
- EEPC India is the Ministry of Commerce-designated CBAM consultant/support body for Indian exporters.
- Legal basis: EU Regulation 2023/956; India's domestic parallel is the Carbon Credit Trading Scheme (CCTS), 2023 under the Energy Conservation Act, 2001 (amended 2022), administered by BEE.