India is increasing financial assistance for exporters dealing with the European Union’s Carbon Border Adjustment Mechanism (CBAM), with Commerce and Industry Minister Piyush Goyal announcing plans to cover the full cost of international certification for micro and small enterprises. The package also includes tiered support for larger businesses and work aimed at strengthening domestic verification capabilities. Goyal made the announcement during a visit to Berlin on 23 October.
Speaking in Berlin, Goyal said the government is prepared to finance certification expenses for smaller exporters through its Export Promotion Mission. The government is also assessing options to build verification capacity in India, with the goal of reducing spending on emissions documentation and compliance requirements linked to European environmental rules. The measures are intended to address administrative and technical costs faced by Indian manufacturers supplying the EU.
Export Promotion Mission and TRACE reimbursement rules
India’s approach builds on the Export Promotion Mission, approved in November 2025 with funding equivalent to about €2.36 billion over six financial years. The programme combines export financing, market-access support, international certification assistance and measures aimed at improving the competitiveness of Indian firms. A central element is the Trade Regulations, Accreditation and Compliance Enablement programme (TRACE), introduced in February 2026 and expanded substantially in July.
Revised rules issued by India’s Directorate General of Foreign Trade on 1 July 2026 set reimbursement levels for qualifying certification and compliance expenditure. Under the rules, eligible micro and small enterprises can receive reimbursement of up to 95%, while medium-sized businesses can receive up to 80%. The standard annual reimbursement ceiling is equivalent to approximately €47,000 per exporter identification code per financial year.
The revised rates replaced earlier reimbursement levels of 60–75% that had been set in February 2026. Eligible spending includes testing, inspection, certification and conformity-assessment services. Payments are split into two stages, with the second instalment linked to exports associated with the relevant certification.
Goyal’s latest commitment to finance 100% of certification costs for smaller exporters would be above the existing 95% reimbursement ceiling. However, revised implementing rules confirming an automatic right to full reimbursement have not been established. As a result, the announcement is described as a policy commitment rather than a confirmed change to the existing framework.
Qualification of specific CBAM verification services for support will depend on applicable eligibility lists and programme conditions. Exporters must also meet documentation expectations tied to EU requirements when supplying covered goods. These costs include emissions data collection, independent verification arrangements and submission of documentation that meets European standards.
CBAM scope for steel and aluminium
The EU’s CBAM entered its definitive phase on 1 January 2026, covering specified imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. The mechanism is designed to align carbon costs for covered imports with costs faced by European producers under the EU Emissions Trading System (EU ETS). For Indian exporters, exposure varies by product category and production characteristics.
For Indian steelmakers, exposure depends on production technology, fuel consumption, emissions intensity and availability of independently verified installation-level data. Integrated plants using coal-intensive blast-furnace production generally face greater carbon exposure than less emissions-intensive facilities. Actual liabilities also depend on applicable product methodology, benchmarks and verified emissions.
Aluminium producers face different considerations tied to electricity prices and emissions intensity of production. Under current CBAM calculations for aluminium, specified emissions categories are covered rather than automatically pricing every indirect emission associated with electricity consumption. This distinction affects how producers evaluate renewable electricity contracts and investments in cleaner power supplies.
Fastmarkets published product-specific modelling in October 2026 estimating an indicative CBAM cost of €277.60 per tonne for Indian hot-rolled coil produced via the blast-furnace/basic-oxygen-furnace route. The estimate used applicable default values and third-quarter carbon pricing. For one category of unwrought, unalloyed aluminium, a corresponding Indian default-value scenario was estimated at approximately €55.12 per tonne.
The modelling does not represent universal CBAM charges for Indian steel and aluminium. Actual liabilities can differ where verified installation emissions replace default values or where other applicable adjustments affect calculations. Even with subsidised emissions documentation, carbon-related costs borne by European importers may remain and could be passed back through commercial contracts.
Domestic verification capacity versus EU accreditation
India’s plan to develop domestic verification capacity is intended to reduce reliance on external technical advisers and overseas inspection services. Engineering companies, testing laboratories and emissions specialists could take on roles such as collecting production data, establishing monitoring procedures, reviewing emissions calculations and preparing industrial facilities for independent verification. The approach distinguishes between technical preparation activities and statutory verification requirements.
The regulatory distinction remains critical under the European Commission’s CBAM accreditation framework. Mandatory verification must be performed by verifiers accredited through relevant EU national accreditation bodies. Companies outside Europe may pursue accreditation themselves, but approval from Indian authorities alone does not satisfy EU requirements.
Verification reports must also follow prescribed European procedures and Registry requirements. As a result, domestic Indian organisations can provide technical preparation and pre-verification services while statutory CBAM verification remains subject to applicable European accreditation rules. Manufacturers seeking use of actual emissions data instead of default values need services that connect these two categories.
Local certification or technical approval cannot replace mandatory EU-accredited verification under CBAM rules. Exporters therefore continue to rely on verifiers meeting EU accreditation conditions even if technical preparation is carried out domestically. This structure affects how compliance documentation is assembled before submission.
CBAM alongside India-EU trade negotiations
The compliance initiative aligns with developments in bilateral trade relations between India and the EU. Negotiations on a free trade agreement concluded in January 2026, while the European Commission submitted proposals for signature and conclusion in September 2026; the agreement has not entered into force. Bilateral merchandise trade reached approximately €118 billion in 2025.
The proposed trade agreement and CBAM address different regulatory areas under EU law. A free trade agreement changes market-access conditions and tariffs, while CBAM imposes carbon-related obligations on specified imported goods. Indian exporters could benefit from improved tariff treatment while continuing to face emissions-reporting, verification and certificate-related commercial exposure tied to CBAM requirements.
Suppliers may still encounter commercial impacts if default emissions values are high or if verification evidence is insufficient for buyers’ needs. European importers may also apply carbon-cost adjustments through contractual arrangements linked to CBAM exposure calculations. These effects can influence outcomes for manufacturers operating on narrow margins despite tariff improvements.
Implementation considerations for reimbursement timing
The support framework aims to reduce compliance costs for smaller Indian manufacturers seeking participation in European supply chains. Public support targets expenses related to establishing emissions-accounting systems and obtaining certification services that require independently verified information. Such businesses often lack dedicated teams for monitoring emissions across production processes, energy inputs and material supply chains.
The programme’s impact depends on implementation details including guidance on eligible services, documentation standards, reimbursement conditions and cooperation between domestic service providers and EU-accredited verifiers. Payment timing is another factor because exporters may need to finance certification expenditure before receiving reimbursement under programme rules.
This creates a distinction between reimbursable compliance costs and potentially larger financing needs linked to carbon liabilities, industrial investment requirements and contractual price adjustments tied to CBAM-related exposures. Government support for emissions verification does not provide capital required for modernising production equipment or reducing fossil-fuel consumption directly through investment in cleaner energy supplies.
Industrial decarbonisation links to export competitiveness
The initiative may reduce administrative costs associated with meeting European requirements compared with competing export origins including Turkey and China. Longer-term commercial effects depend on whether compliance assistance coincides with measurable reductions in industrial emissions at source facilities supplying covered goods into the EU market.
For steelmakers, potential investment areas mentioned include energy efficiency improvements, lower-emission production technologies, material recovery efforts and alternative production routes. For aluminium manufacturers, process improvements and energy procurement remain important for competitiveness even where current CBAM rules treat electricity-related emissions differently within calculation methods used under EU requirements.
European importers continue assessing suppliers based on production costs, delivered prices, verified emissions information, contractual reliability and exposure to carbon-adjustment liabilities under CBAM-linked arrangements. India’s government seeks to improve exporters’ position by reducing expenses associated with preparing documentation required for compliance with European requirements.
The approach described focuses on reducing certification-related administrative expenditure while addressing CBAM compliance obligations under EU legislation that affect carbon-intensity exposure through verified or default emission calculations used in determining liabilities for covered imports into Europe.