EU-India FTA, CBAM and carbon costs: Can Indian aluminium crack the European market?
A former Deputy Secretary General of the European Parliament and Director of the EPP Group, Paolo Licandro, has extensive experience in European policymaking, international relations, industry, energy and EU affairs. He is currently the Founder and CEO of eEuropa Belgium and Editor of eEuropa.Blog. He has worked with European prime ministers, ministers and EU commissioners and has held senior roles covering EU enlargement, Mediterranean and Middle East relations, and industry, research and energy. A nuclear engineer, he holds a master’s degree from Politecnico di Milano and has worked with ENI, ARS-Pragma and the EU Joint Research Centre.
In this interview, Paolo Licandro shares his perspective on EU–India aluminium trade, CBAM and the opportunities for Indian producers in Europe.
AL Circle: Once the EU-India FTA comes into force, what kind of increase in Indian aluminium exports to Europe do you realistically expect over the next three to five years — in terms of percentage or additional tonnes?
Paolo Licandro: I see concrete opportunities for growth. To give an order of magnitude, a cumulative increase of 10-30 per cent in Indian export volumes to the EU over three to five years could be explored as a planning scenario, measured against the level before implementation. This is a provisional assumption, not a statistical forecast or an official estimate of the FTA’s impact.
The outcome will depend on actual tariff concessions, implementation schedules, European demand and Indian producers’ ability to deliver quality, reliable supplies and regulatory compliance. Primary aluminium, rolled products, extrusions and finished components must be assessed separately: their markets and competitive conditions differ considerably.
India could expand by meeting additional European demand and by gaining market share from other suppliers. Opportunities also extend to recycled aluminium and higher-value products, provided alloy quality, traceability and customer specifications are satisfied.
The next step is to test this scenario against existing trade flows and product-specific conditions. An opportunity map covering products, customer sectors, competing suppliers and market-access requirements would help companies turn commercial potential into practical priorities.
AL Circle: How much could tariff liberalisation under the FTA potentially reduce the landed cost of Indian aluminium products in the EU? Can you quantify the likely advantage in percentage terms for key aluminium products?
Paolo Licandro: The benefit must be calculated for each customs code, checking the current tariff, the concession under the agreement, the reduction schedule and the rules of origin. There is no single percentage applicable to aluminium as a whole.
The direct saving is the duty removed from the customs value. For illustration, eliminating a 6 per cent tariff would save EUR 60 on goods with a customs value of EUR 1,000. Compared with the value plus that duty, the reduction would be approximately 5.7 per cent; measured against the full landed cost, including transport and other expenses, it would be smaller. This is an arithmetic example, not a claim about a particular aluminium tariff concession.
Exporters, working with their European importers and customs specialists, should prepare a product-specific tariff sheet identifying classification, current duty, preferential treatment, implementation date and origin evidence. This would support quotations and investment planning. Tariff preferences must also be assessed alongside CBAM: an FTA does not automatically remove the carbon-border obligation.
AL Circle: CBAM is now in its definitive phase. For an Indian aluminium producer exporting to the EU, what could be the approximate carbon-related cost impact per tonne of aluminium, and how wide could the gap be between high-carbon and low-carbon Indian producers?
Paolo Licandro: The definitive regime applies to imports from 1 January 2026, although certificate purchases start in February 2027, including certificates covering 2026 imports. The legal obligation rests with the European importer or relevant customs representative. For aluminium and the other goods covered by the mass threshold, the annual exemption applies where the importer does not exceed 50 tonnes in aggregate.
Our calculation for unwrought aluminium under CN 7601 from India gives a gross monetary reference of approximately EUR 155 per tonne, using the increased 2026 default emissions values and the second-quarter certificate price. The same reference applies to the UAE and Bahrain, compared with approximately EUR 162 for Canada, EUR 195 for South Africa and EUR 265 for Mozambique. Goods originating in Norway and Iceland are outside CBAM’s territorial scope.
These figures are gross comparison references, not final CBAM liabilities. They also do not measure the difference between individual Indian producers. Actual obligations depend on regulatory adjustments, including the adjustment reflecting EU free allocation, verified installation emissions and eligible deductions for a carbon price effectively paid in the production country.
To use actual emissions, independent verification by a verifier holding the appropriate EU CBAM accreditation is required; self-certification is insufficient. Official default values offer an alternative under the applicable rules. India’s NABCB can provide information about verification bodies, but domestic accreditation does not itself constitute EU CBAM accreditation. The verifier’s authorisation and sectoral scope must be checked before appointment.
In India, the National Accreditation Board for Certification Bodies (NABCB), part of the Quality Council of India, can serve as a reference point for information on verification bodies. However, Indian national accreditation does not itself constitute EU CBAM accreditation. Before appointing a verifier, exporters should confirm that it holds the accreditation required under EU CBAM rules and that its accredited scope covers the relevant aluminium activities.
A voluntary assessment of data availability, verification status and documentation gaps could help identify exporters’ technical needs. CBAM compliance must also sit within a wider product-compliance assessment. Chapter 21 of our EUALU eBriefing provides an initial framework by product family and end use.
AL Circle: What percentage of Indian aluminium producers, in your assessment, are currently equipped with the emissions data, verification systems and documentation needed to comply effectively with EU requirements?
Paolo Licandro: I do not have a representative survey supporting a reliable percentage. Readiness should be assessed through demonstrated capabilities: emissions measurement, traceability, installation records and verification meeting the applicable requirements.
An Indian industry association or chamber of commerce could commission such a survey, supported by a university or research institute and specialists in emissions accounting and CBAM verification.
The sample should distinguish primary producers, recyclers and processors, company size and EU export experience. A common questionnaire should examine product-level and installation-level data, calculation methods, verification status and the ability to supply information to European importers. Documentary checks on part of the sample would distinguish reported readiness from demonstrated readiness.
A corporate sustainability report alone does not establish that emissions data are usable for CBAM. The information must be linked to exported products and provided in the required form. The survey should therefore produce aggregate indicators and a practical account of the main gaps companies need to address.
AL Circle: Beyond CBAM, how much additional compliance cost, as a percentage of production cost or export value, could Indian aluminium manufacturers face from the EU's broader environmental, product and supply-chain regulations? There is no defensible sector-wide percentage. A supplier of basic metal faces different requirements from a manufacturer of food-contact packaging, construction products or automotive components.
Paolo Licandro: Costs may include testing, technical documentation, traceability, audits and production changes. Companies must distinguish legal obligations from additional customer specifications, and one-off investments from recurring expenses. Costs per tonne will also depend on export volumes: some initial expenses can be spread across larger sales.
Each company should prepare a compliance matrix for its intended EU products and end uses, working with its importer and relevant regulatory specialists. For every requirement, this should identify the necessary evidence, responsible party, deadline, initial expenditure and recurring cost.
That matrix becomes a budgeting and management tool. It allows the company to calculate market-access costs, assign responsibilities and schedule adjustments before making commercial commitments. A general checklist is a starting point; the company’s own products and customers determine the final assessment.
AL Circle: If European buyers increasingly factor embedded carbon into procurement decisions, what carbon-intensity level would Indian aluminium producers need to target to remain competitive in the EU market over the next five years?
Paolo Licandro: No single carbon-intensity threshold guarantees competitiveness. The final purchase price includes the metal price and premiums, processing, required specifications, transport, insurance, duties, residual CBAM costs and financing. Buyers also assess quality, delivery times, traceability and continuity of supply.
The first objective should be verified, comparable emissions data with a clearly defined boundary. Direct emissions relevant to aluminium CBAM calculations and the product’s broader carbon footprint answer different questions. Procurement requirements may extend beyond the emissions covered by the border mechanism.
A consistent comparison of verified emissions, official default values and customer requirements would help producers prioritise improvements. For recycled aluminium, alloy quality, traceability and reliable scrap supplies are equally important.
Recycling can save up to 95 per cent of the energy required for primary production, making it increasingly important economically and environmentally. However, producers should not assume that recycled content alone establishes a particular CBAM liability or customer acceptance: the applicable calculation rules and product specifications still need examination.
AL Circle: Could you quantify the potential size of the opportunity for Indian aluminium in Europe? For example, what additional annual export value or volume could realistically be unlocked if Indian producers combine FTA tariff benefits with full regulatory compliance?
Paolo Licandro: The market is substantial. In 2024, the EU imported EUR 29.5 billion of aluminium and related articles, recording a trade deficit of EUR 11.1 billion. These figures cover the whole HS 76 chapter, not only primary aluminium or a market entirely accessible to India.
Between 2019 and 2024, import value increased by 29.9 per cent, equivalent to approximately 5.4 per cent annual compound growth, while imported weight declined by 6.2 per cent. The value increase therefore principally reflected higher prices; it should not be extrapolated as growth in physical demand.
We are working to understand how the FTA and environmental requirements could reshape European sourcing, separating additional demand from supplier substitution. Energy is a crucial factor. Eurostat’s series for non-household users consuming 2,000–20,000 MWh annually shows EU electricity prices rising from EUR 101.6/MWh in the second half of 2015 to EUR 159.6/MWh in the second half of 2025 — approximately 57 per cent in nominal terms, excluding VAT and other recoverable charges. This is a business-cost indicator, not the specific electricity price paid by large smelters.
If European capacity remains under pressure while industrial needs grow, competitive external suppliers could gain opportunities. Labour costs, skills and productivity also matter. Buyers may pay premiums for scarce specifications or secure supplies, but aluminium’s strategic importance does not imply unlimited willingness to pay.
Recycling could moderate import dependence while creating opportunities in secondary metal and processing. Under European Aluminium’s conditional scenario, post-consumer recycling could meet half of European aluminium demand by mid-century.
Stricter EU waste-shipment rules also affect this market. From 21 May 2027, non-hazardous waste exports to non-OECD countries will generally be prohibited unless the relevant environmental conditions for exceptions are met. Independent destination-facility audits are also required. Indian recyclers must therefore assess future access to European scrap separately from trade in recycled aluminium legally classified as a product.
