The India-UK free commerce settlement has no provision to counter Britain’s proposed carbon tax, however amid uncertainty and absence of UK laws, New Delhi has preserved its right to retaliate or rebalance concessions if future measures influence home exports, an official stated.
The UK authorities in December 2023 determined to implement its Carbon Border Adjustment Mechanism (CBAM) beginning 2027.
According to financial suppose tank GTRI, India’s exports value USD 775 million to the UK could also be impacted due to Britain’s choice to introduce carbon tax on merchandise comparable to iron and metal, aluminium, fertiliser and cement, from 2027.
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The official stated that the free commerce settlement (FTA) with the UK has no provisions to counter CBAM, which has the potential to nullify the concessions supplied by Britain to India.
“Because of current uncertainty and no legislation in place, there is an understanding that India will/ has preserved its right to retaliate or rebalance the concessions (in future),” the official stated.
The UK, after the European Union (EU), would be the second financial system to implement CBAM. It calls it the import carbon pricing mechanism and it’ll initially deal with sectors like iron, metal, aluminum, fertiliser, hydrogen, ceramics, glass, and cement.
This tax may vary from 14-24% of the import worth on full phase-out of free allowances below the ETS (Emission Trading System).
During the latest go to to London, Commerce and Industry Minister Piyush Goyal has flagged considerations over this tax and has conveyed that India might contemplate retaliation if the UK would go forward with the plan.
Published – May 07, 2025 01:18 pm IST
