EU Carbon Border Tax To Hit Indian Steel Exports: Steel Secy

(MENAFN- KNN India) New Delhi, Sep 18 (KNN) The European Union's Carbon Border Adjustment Mechanism (CBAM) will significantly affect India's exports to the region, and the domestic industry must take corrective measures to mitigate the impact, Steel Secretary Sandeep Poundrik said on Wednesday.

Speaking at the FT Live Energy Transition Summit India in the capital, Poundrik said the CBAM - designed to impose a carbon price on imports from countries with less stringent environmental regulations - poses a challenge for India's steel sector, which remains heavily reliant on the blast furnace-basic oxygen furnace (BF-BOF) route, a process with higher carbon emissions.

The CBAM, which will be fully implemented in 2026, initially covers iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen.

The tariff will mirror the carbon price in the EU Emissions Trading System, estimated at Rs 5,200 per tonne of CO2 equivalent in 2026, with a projected annual increase of 5 percent as free allowances are phased out.

Poundrik noted that new steel capacities in India continue to follow the BF-BOF route, though some expansion in electric furnace capacity - a less carbon-intensive process - is underway. He stressed that exporters must adapt quickly to retain competitiveness in the European market.

Later, speaking to PTI, he said that of India's total annual steel exports of around 4.5 million tonnes, nearly two-thirds are destined for Europe.

The warning comes as the government is urging producers to scale up output and expand their global presence.

According to official data, the steel sector contributes about 12 percent of India's greenhouse gas emissions, with an emission intensity of 2.55 tonnes of CO2 per tonne of crude steel, higher than the global average of 1.9 tonnes.

Last year, the Ministry of Steel introduced a taxonomy for green steel to incentivise emission reduction.

Under this framework, steel with CO2 intensity below 2.2 tonnes per tonne of finished product qualifies as green, with ratings ranging from three-star (2–2.2 tonnes) to five-star (1.6 tonnes or less).

(KNN Bureau)

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