India is seeking a clearer pathway for its domestic carbon-pricing system to be considered under the European Union’s Carbon Border Adjustment Mechanism (CBAM). The discussions between Indian officials and the European Commission focus on emissions monitoring, verification, and how carbon costs on traded goods are treated. The aim is to align India’s domestic approach with requirements relevant to CBAM compliance.
On 12 October 2026, India’s Power Secretary Pankaj Agarwal met Gerassimos Thomas, director-general for taxation and customs at the European Commission, in New Delhi. The meeting covered India’s developing carbon market, implementation of EU CBAM, and monitoring, reporting and verification (MRV) systems. It also addressed the potential recognition of domestic carbon-pricing mechanisms.
No formal agreement recognizing India’s carbon-pricing system under EU CBAM resulted from the meeting. As a result, Indian exporters cannot assume that carbon costs incurred under domestic arrangements will automatically qualify for deductions from their European CBAM liabilities. The outcome leaves eligibility dependent on evidence and applicable rules.
India reports CCTS coverage and non-fossil power capacity
In the discussions, India reported that emissions-intensity reduction targets under its Carbon Credit Trading Scheme (CCTS) cover 490 industrial units. India also highlighted 308 GW of non-fossil power capacity out of total installed electricity generation capacity of 558 GW. These figures were presented in the context of India’s carbon market development.
The technical dialogue was described as a channel for examining how India’s developing carbon market and emissions-monitoring infrastructure could relate to EU CBAM requirements. For exporters, commercial relevance depends on whether domestic carbon-pricing arrangements can be supported by evidence acceptable under the European framework. The existence of a national carbon market alone was not presented as sufficient for eligibility.
Exporters are expected to show that a qualifying carbon price was effectively paid on emissions embedded in goods entering the EU. This requirement links CBAM relief to demonstrable carbon-cost payments tied to the emissions associated with imported products. Evidence standards therefore remain central to any potential treatment of domestic carbon costs.
Evidence requirements for recognizing domestic carbon costs
Determining whether domestic carbon costs qualify for recognition requires evidence covering the payment made and the emissions to which it applies. The evidence also needs to address how free allocation is treated and whether there are rebates or other forms of compensation. The relationship between the carbon price and the specific exported product is also relevant.
The MRV and verification arrangements are therefore positioned as key elements in any potential relief mechanism. Indian producers would need to connect domestic carbon costs to installation-level emissions and to the products supplied to European customers. This linkage is necessary for aligning domestic accounting with CBAM-related expectations.
For EU importers, outcomes could influence supplier comparisons based on whether documented domestic payments qualify after CBAM adjustments. A producer with a higher mill price could become more competitive if its domestic carbon payment is eligible and documented. A lower-priced supplier could face a different adjustment if its emissions do not qualify for a carbon-price deduction.
Implications for steel and aluminium exports
The discussions were described as particularly relevant to steel and aluminium, sectors where India is a major exporter to international markets. Any interaction between domestic carbon pricing, emissions verification, and EU import requirements could affect export costs for producers supplying these markets. The extent of any benefit would depend on final regulatory treatment and substantiation of eligible payments.
The potential expansion of EU CBAM to additional downstream products from 2028 was also raised, contingent on adoption of relevant legislation. If implemented, this could widen the range of Indian manufactured goods exposed to the mechanism. For affected producers, substantiating eligible payments against emissions associated with exported goods would remain necessary.
The talks were also linked to efforts by third countries to connect domestic climate policies with requirements under carbon-border measures. Practical value depends on whether relevant carbon costs and emissions records can be demonstrated under the rules of the importing jurisdiction. In this context, evidence capability is presented as a determining factor.
UK CBAM framework as a regional reference point
Serbia and Montenegro were cited as providing a regional comparison through the United Kingdom’s CBAM framework. Both countries are listed by the UK as jurisdictions with carbon-pricing systems that may qualify for relief, subject to applicable evidence and eligibility requirements. This reference point was provided alongside discussion of EU treatment.
The UK arrangements were noted as not determining how the EU will treat India’s carbon-pricing system. The two jurisdictions operate under separate legal frameworks, so recognition under one does not establish entitlement under the other. For Indian exporters, this distinction keeps EU eligibility dependent on European rules rather than UK practice.
The central issue for Indian exporters remains whether CCTS coverage, MRV arrangements, and verification infrastructure can provide sufficiently precise evidence of effective carbon cost per tonne of steel or aluminium entering the European market. This requirement ties documentation capacity directly to product-specific emissions accounting for CBAM purposes.