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Carbon Border Adjustment Mechanism

Carbon Border Adjustment Mechanism:

European Union is willing to collaborate with India in easing the administrative burden for businesses while enforcing its Carbon Border Adjustment Mechanism (CBAM).

  • CBAM or Carbon Tax is a tax that imposes importers and non-EU manufacturers to pay for the carbon emission linked to the goods they sell within EU limits.
  • Under the political agreement, the CBAM will enter into force in its transitional phase as of 1 October 2023
  • It seeks to impose tariffs on imports with a high carbon footprint entering the 27-member bloc.
  • Encourage cleaner industrial production in non-EU countries
  • India is considering imposing retaliatory tariffs on EU imports in response to CBAM, which India said is discriminatory towards developing nations.