From 1st October 2023, The European Union has implemented a new regulation on imports through Carbon Border Adjustment Mechanism (CBAM). This move will make exports to EU costlier by 30%. All India Association of Industries (AIAI) expresses concern on this development and hope that the EU will relax this new tax regime to avoid counter measures by exporting nations.
Expressing his worry on behalf of the MSME sector, President of All India Association Industries Dr. Vijay Kalantri said, this is a rather harsh step by the European Union to restrict imports. He further said this additional Carbon Tax of 25 – 30% that will be imposed from 1st January 2026, will substantially affect exports from large and traditional trade partners like India. He urges upon the Government of India to take up this issue at the highest level with our EU counterparts and find a solution at the earliest.
CBAM will be implemented in two parts. Part one is Advance Data sharing by exporters from 1 st October 2023. Part two is imposition of Tax from 1st January 2026. This means the exporters have to furnish elaborate and sensitive data in advance to the EU before exports begin. This is a challenge that the industry will face heavily. This burden will be felt harder particularly by the MSME, SME exporters as they procure goods from large sector. They need to obtain sensitive production and emission data from their large sector suppliers that may be difficult or impossible. This new compliance will add up the cost of exports by at least 10% over and above the CBAM tax at the port of import. Obviously, the overall exports will not be competitive. India must stiffly resist this move with counter measures.
All India Association of Industries, has begun discussions with the concerned Ministries, departments, experts as well as with our international counterparts to dilute the problem for the industry. We expect feedback from the industry so that we can together build pressure to resist this negative development. AIAI is also planning events to create awareness and to find alternate options.