As the European Union prepares to implement the Carbon Border Adjustment Mechanism (CBAM) in 2026, Indian exporters face a significant challenge. The mechanism, aimed at curbing carbon emissions by imposing tariffs on imports based on their carbon footprint, could severely impact industries exporting to Europe. According to industry experts, the CBAM could lead to cost increases ranging from 20-30% of the margin for Indian exporters, a figure that could threaten their competitiveness in the global market.
CBAM is designed to ensure that imported goods adhere to the same carbon pricing as products made within the EU, preventing carbon leakage. For Indian exporters in sectors such as steel, cement, fertilizers, and electricity, this could mean substantial additional costs. As of 2022, India’s exports to the EU stood at over $60 billion, with key sectors like textiles, chemicals, and industrial goods at risk of feeling the pinch from CBAM-related tariffs.
A Serious Threat to Margins
Abhinav Kaushal, Founder & CEO of Zero Carbon One, warns that this impact on Indian exporters is not to be underestimated. “The CBAM could result in an additional cost burden of 20-30% of the margin for Indian exporters. Given the fierce global competition, they will likely not be able to absorb this cost, making them vulnerable to being replaced by larger suppliers. The playing field is changing, and those who do not adapt risk being left behind,” Kaushal emphasized.
For many exporters, these added costs may effectively cancel out their price advantage over competitors, especially in industries where margins are already thin. With this scenario looming large, it becomes critical for Indian companies to rapidly adapt to a low-carbon economy and demonstrate a commitment to sustainability.
Zero Carbon One: Leading the Transition
This is where climate tech firms like Zero Carbon One are playing a pivotal role. As a leading climate tech company in the Global South, Zero Carbon One specializes in helping Indian exporters navigate the complexities of CBAM compliance. The firm conducts full GHG (Greenhouse Gas) inventory mapping, enabling businesses to measure and monitor their emissions. By understanding their carbon footprint across all stages of production, exporters can take informed steps toward reducing their emissions or offsetting them.
Moreover, Zero Carbon One assists exporters in transitioning to a low-carbon economy by offering solutions such as carbon credits. These credits, which can be purchased via blockchain technology, allow companies to offset their carbon emissions, effectively neutralizing their impact. This innovative approach not only helps exporters meet CBAM standards but also strengthens their sustainability credentials in the global market.
Navigating the Future of Trade with Sustainability
As the EU strengthens its regulatory framework around carbon emissions, Indian exporters must adapt quickly to remain competitive. Partnering with climate-focused firms like Zero Carbon One offers a clear pathway for businesses to reduce their carbon footprint, whether by decarbonizing their supply chains or offsetting unavoidable emissions through verified carbon credits.
The upcoming CBAM legislation represents a monumental shift in global trade. For Indian exporters, it is not just a challenge but also an opportunity to embrace sustainability and secure their place in a carbon-conscious global economy.
By working with Zero Carbon One, Indian exporters can ensure they are not only CBAM-compliant but also leading the charge towards a sustainable future, one that prioritizes environmental responsibility alongside economic growth.
For more information on how Zero Carbon One is helping Indian exporters with CBAM challenges, please contact: [email protected]
