Exports to the European Union are expected to be affected by tariffs ranging from 20 to 35% on high-carbon goods, including steel, iron ore and cement, according to the report by the Indian finance ministry.
The EU has recently unveiled its initial plan to introduce a tax on high-carbon imports starting from 2026. The objective of this measure is to work towards achieving zero greenhouse gas emissions by 2050, aligning with the EU's long-term sustainability goals. However, it is important to note that this target is set 20 years earlier than India's own emission reduction target.
The EU has announced that starting from October 1, 2023, carbon steel content reports will be required for imports of commodities including steel, cement, aluminum, fertilizer, electricity, and hydrogen. This measure poses a risk to India's exports, as it may increase complexity and costs. Additionally, the EU's introduction of a carbon cap adjustment mechanism further adds to the potential impact on India's exports.
Additionally, the report highlights that energy prices are expected to decrease in the coming years, which could help offset some of the trade deficit.
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