India ramps up preparedness for European Union's carbon tax; verifiers begin EU registry access
India has set up a dedicated committee to help domestic exporters meet the compliance requirements of the European Union's carbon border tax on select imports.
Indian verifiers — the accredited third parties who certify embedded-carbon data submitted by exporters — have been granted access to the EU's CBAM registry this month, enabling them to conduct emissions verification for Indian consignments.
Domestic exporters covered by the mechanism will be required to start submitting CBAM returns (import declarations with verified embedded-emissions data) from September 2027.
The government is coordinating with exporters and industry bodies to streamline data collection and third-party verification ahead of the mechanism's full financial phase.
Carbon Border Adjustment Mechanism (CBAM)
CBAM is an EU trade-and-climate instrument under Regulation (EU) 2023/956, designed to place a carbon price on imports of select carbon-intensive goods equivalent to the price EU producers pay under the EU Emissions Trading System (EU ETS), thereby preventing "carbon leakage" (production and emissions shifting to countries with laxer climate rules). It covers six sectors: iron and steel, cement, aluminium, fertilisers, hydrogen, and electricity, along with select precursor goods. CBAM's transitional phase (reporting-only, no financial liability) ran from October 2023 to December 2025; the definitive regime began on 1 January 2026, with importers required to purchase CBAM certificates from 1 February 2027 to cover embedded emissions in goods imported during 2026, and the obligation phasing in gradually through 2034 alongside the parallel phase-out of free EU ETS allowances.
India's committee and verifier-access arrangements are direct compliance responses to CBAM's definitive phase, ensuring Indian exporters of steel, aluminium, and similar goods can generate EU-recognised, third-party-verified emissions data before the certificate-purchase and return-filing obligations bite.
Carbon Leakage and the Rationale for Border Carbon Adjustments
"Carbon leakage" refers to the risk that firms in countries with strict domestic carbon pricing relocate production (or lose market share to imports from) countries with weaker climate regulation, undermining the effectiveness of domestic climate policy without reducing global emissions. Border carbon adjustments like CBAM address this by imposing an equivalent carbon cost on imports, aiming to create a "level playing field" between domestic and foreign producers while incentivising global decarbonisation of traded goods. Critics, including India, have flagged CBAM as a potential non-tariff trade barrier that could disproportionately affect developing-country exporters who have historically contributed less to cumulative emissions, raising concerns under the UNFCCC's principle of "Common but Differentiated Responsibilities" (CBDR).
Key Details
- CBDR is enshrined in Article 3 of the UNFCCC (1992) and reaffirmed in the Paris Agreement (2015).
- India, alongside other developing/BASIC-grouping countries, has raised CBAM concerns at the WTO and in bilateral trade talks, arguing it could function as a disguised trade restriction.
- India's own carbon market instrument, the Carbon Credit Trading Scheme (CCTS) under the Energy Conservation (Amendment) Act, 2022, is a parallel domestic mechanism relevant to how India frames its CBAM response.
India's proactive compliance push (committee, verifier access) reflects a dual-track strategy — preparing exporters to minimize the cost impact of CBAM in the near term, while continuing to raise CBAM's compatibility with WTO rules and equity principles at the multilateral level.
Third-Party Verification in Carbon Reporting
Under CBAM, embedded-emissions data reported by non-EU exporters must be certified by an accredited independent verifier before importers can rely on it to reduce their certificate-purchase obligation; verifiers must themselves register on the EU's CBAM Registry, a process the European Commission opened from 1 September 2026 for accredited bodies. Accurate third-party verification is a recurring feature of global carbon-market and disclosure frameworks (also seen in India's own CCTS and in voluntary carbon markets), since self-reported emissions data without independent audit is considered unreliable for regulatory or trading purposes.
Key Details
- CBAM verifiers must register with the CBAM Registry within two months of receiving accreditation, and not before 1 September 2026.
- Verification reduces information asymmetry between exporting-country producers and the importing authority (the European Commission/national customs authorities).
- India's domestic equivalent — auditors/verifiers under the CCTS — follows a comparable accreditation-and-verification design.
The grant of EU registry access to Indian verifiers this month is the operational step that allows India-based accredited bodies to certify domestic exporters' emissions data directly, rather than routing verification through EU-based agencies, reducing compliance cost and turnaround time.
- CBAM legal basis: EU Regulation (EU) 2023/956; covers iron & steel, cement, aluminium, fertilisers, hydrogen, and electricity.
- Transitional (reporting-only) phase: October 2023 – December 2025; definitive (financial) phase: from 1 January 2026.
- CBAM certificate sales via the EU's centralised platform begin 1 February 2027; India's exporters must begin filing CBAM returns from September 2027.
- Verifier registration on the EU CBAM Registry opened from 1 September 2026 (Indian verifiers granted access this month).
- India's domestic carbon market counterpart, the Carbon Credit Trading Scheme (CCTS), operates under the Energy Conservation (Amendment) Act, 2022.