India reserves right to negate Britain's CBAM impact
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New Delhi: The India-UK free trade agreement does not include a provision on Britain's proposed Carbon Border Adjustment Mechanism (CBAM) but if such a tax is imposed in the future, India will have the right to take steps to mitigate its impact on domestic exports, officials said Friday.CBAM is not in the pact as Britain has not yet notified the tax.The UK had in December 2023 decided to implement CBAM from 2027.The issue was flagged during the Comprehensive Economic and Trade Agreement (CETA) negotiations."If it is implemented and negates the trade benefits of India under the agreement, India will have the freedom to rebalance it. We can take counterbalancing measures. This much understanding has been made in the form of note verbale," said an official.A note verbale is a diplomatic communication between two countries."There is an understanding that in case the UK make it effective against India in future, then we will also have the right to take counterbalance measures... India can take away the concessions and there will be a mechanism for that," the official added.India is also in talks with the EU, which also plans to put in a CBAM. The two sides are negotiating a trade pact, which is likely to be concluded this year. India has termed the CBAM a trade barrier.
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