Smaller steel and engineering manufacturers in India are reporting financial and operational pressure linked to the EU Carbon Border Adjustment Mechanism (CBAM), which brings emissions reporting into export contracts. Companies say they are struggling to obtain upstream emissions information needed for product-level calculations. They also report higher spending on verification and increased caution from some European buyers.
Industry representatives describe the main difficulty as not the carbon charge itself, but the absence of reliable emissions data from steel suppliers. Smaller manufacturers say they need supplier records to calculate the carbon footprint of products sold into European markets. The reporting gap is particularly relevant for foundry products, forged components, flanges, tubes, fasteners and machinery parts that often use steel bought from larger domestic producers.
Upstream emissions records affect CBAM reporting
Experiences described in coverage dated 30 October point to challenges across Indian industrial supply chains as CBAM becomes a cost factor for European importers. Arun Kumar Garodia, managing director of Kolkata-based Corona Steel and former chairman of the Engineering Export Promotion Council of India, identified access to upstream carbon-footprint information as a major issue. Smaller processors, he said, often cannot obtain verified emissions records from primary and secondary steel manufacturers supplying raw materials.
When verified records are unavailable, manufacturers may have difficulty determining emissions attributable to purchased steel and their own subsequent production steps. For European customers importing products covered by CBAM, incomplete information can increase reliance on prescribed default values rather than verified actual emissions. The difference between default and verified figures can materially affect carbon-cost calculations for importers.
The information problem can also extend to manufacturers whose finished goods are not currently covered by CBAM obligations. European customers may request emissions data voluntarily or in anticipation of downstream expansion. Such requests are described as commercial and distinct from existing statutory requirements under CBAM.
Monitoring and verification spending rises for smaller firms
Preparing facilities for emissions reporting adds cost for smaller enterprises. Trade researcher Ajay Srivastava, founder of the Global Trade Research Initiative, estimated that establishing factory-level monitoring and reporting capabilities can require initial expenditure of about €18,900 or more, depending on installation and production processes. Separate industry estimates place recurring annual spending on monitoring, reporting, software, administration and verification at roughly €14,100–€18,900 for some smaller firms.
The estimates are described as illustrative rather than standard costs for every Indian exporter. They exclude equipment modernisation and cleaner-production investments and are separate from any CBAM certificate liabilities incurred by European importers. For companies operating with narrow margins, compliance preparation costs combined with potential production upgrades and customer price adjustments could affect profitability and working-capital needs.
The burden is also reported to be more difficult where manufacturers source materials from multiple upstream suppliers. In such cases, emissions information may be inconsistent or unavailable across different purchases. Industry accounts link these conditions to practical constraints in assembling documentation for export-related reporting.
Customer purchasing decisions show uncertainty
The commercial impact is described at the level of individual supplier relationships. Digvijay Singh Chauhan, managing partner of Noida-based machinery-parts exporter UNISPARES India, said some European customers reduced orders or reconsidered purchasing arrangements due to additional compliance uncertainty. A steel producer based in Jamshedpur reported weaker enquiries from smaller European buyers.
The Jamshedpur company produces about 40,000 tonnes annually and exports around 20,000 tonnes, mainly as pipes, tubes and flanges. Its management said some smaller customers withdrew from purchasing discussions while broader effects remained difficult to quantify. These accounts indicate uncertainty in specific relationships but do not establish a general decline in Indian steel exports to Europe.
The report notes that other factors can influence purchasing decisions, including industrial demand levels, competing suppliers, European trade safeguards, conventional tariffs, freight costs and changing inventory requirements. It also cites government data showing finished steel exports rose 31.3% year on year in August 2026 to approximately 694,000 tonnes. That figure covers all destinations and does not show whether exports to the EU increased.
Deloitte estimates point to potential scale of data demands
Deloitte India estimated that about 25,000–30,000 micro, small and medium-sized enterprises across steel, foundry, forging, fasteners and aluminium supply chains could face direct or indirect emissions-data requirements. The estimate is not presented as an official count of businesses legally subject to CBAM. Coverage depends on customs classification of exported products, obligations of European importers and any future expansion to downstream goods.
The estimate is described as indicating the potential size of administrative workload for Indian manufacturing. Unlike large integrated steel producers, smaller suppliers may lack dedicated emissions-accounting teams and may have limited resources for independent technical assistance. Industry representatives have called for simplified reporting arrangements, shared technical facilities and improved access to qualified verification services.
Verification rules require EU-accredited independent checks
Verification capacity is identified as another constraint when exporters seek to use actual emissions figures in CBAM-related declarations. The European Commission requires that emissions data used for CBAM declarations be independently verified under the applicable EU accreditation framework. An Indian verification organisation may develop technical expertise and provide domestic pre-verification services.
However, local accreditation alone does not establish eligibility to issue statutory CBAM verification reports under EU rules. The distinction is relevant as New Delhi considers expanding domestic verification capacity while increasing financial support for exporters pursuing international certification. On 23 October 2026, the Indian government announced additional certification-support ambitions including proposals to cover full eligible certification costs for micro and small enterprises.
The financial assistance is described as helping companies meet certification expenditure without automatically reducing embedded emissions in products or removing certificate obligations for EU importers.
CBAM factors enter industrial lending assessments in India
CBAM is also reported to affect manufacturing credit assessments by Indian banks and industrial investors. Potential exposure extends beyond direct production expenses to include compliance preparation costs, availability of supplier data and recurring verification expenses. It can also involve changes in European customer contracts and the possibility that high calculated emissions weaken export competitiveness.
The longer-term investment requirement may be higher where manufacturers need cleaner equipment, improved energy efficiency or lower-emission raw materials. For exporters in Serbia, Montenegro and other Western Balkan countries, the Indian experience is cited as highlighting the importance of establishing reliable emissions-data chains before European customers make comprehensive traceability a procurement condition.
The report states that suppliers able to document material origins along with installation-level emissions and production processes may be better positioned than competitors relying on incomplete records. It describes two connected tasks: making emissions accounting affordable for smaller manufacturers and ensuring upstream steel producers provide information usable under applicable rules by European buyers.