CBAM may cost Indian steel exporters €551 million by 2034: Report
Carbon Border Adjustment Mechanism
(CBAM) could increase the cost of
Indian steel manufacturers
to €551 million by 2034, potentially reducing their global competitiveness, according to a latest report by Grant Thornton Bharat.
The CBAM entered its reporting phase in Q3 2024 and is set to impose financial obligations from January 2026. It is an import duty on a product manufactured in a country that has more lax climate rules than the EU.
According to the report, flat-rolled iron and steel products, which make up nearly 80 per cent of India's steel exports to the EU, are expected to be among the most affected.
Readiness gap between Indian and EU producers
The report highlights a gap between Indian and EU steel production emission levels, suggesting a potential financial burden for Indian exporters unless emissions are aligned with EU standards. While India has begun its decarbonisation efforts through schemes like the Carbon Credit Trading Scheme, DEEP, ADEETIE, and Green Steel Certification, the report notes that the transition remains resource-intensive—especially for micro, small and medium enterprises (MSMEs).
'CBAM poses a significant challenge for auto component exporters, especially MSMEs reliant on fossil fuel-based energy. To remain competitive, we must accelerate the shift to cleaner energy sources and adopt sustainable manufacturing practices. A targeted approach is critical for a smooth and equitable adaptation,' said Saket Mehra, Partner and Auto & EV Industry Leader, Grant Thornton Bharat.
Support services and policy collaboration
To assist Indian businesses, Grant Thornton Bharat has introduced a range of CBAM-aligned services. These include emission mapping, financial impact assessments, supplier engagement, and green steel certification support. The firm is also empanelled with the Ministry of Power and the National Institute of Secondary Steel Technology (NISST) to facilitate industry-wide preparedness.
Amit Kumar, Partner and Climate Ecosystem Leader, Grant Thornton Bharat, stated, 'The EU's CBAM represents a pivotal shift in global trade, urging industries to align with low-carbon benchmarks. For Indian exporters, this transition demands financial and technological support. Collaboration between the EU, Indian policymakers, and the private sector is crucial.'
As the deadline for full CBAM enforcement approaches, the report calls for coordinated action between government, industry, and international partners to ensure a just and sustainable transition for Indian exporters.
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