Upcoming EU-India trade talks: New Delhi to seek carbon tax exemption for SMEs

In the upcoming free trade deal negotiations with the European Union, India is set to request a three-year exemption for its micro, small, and medium enterprises (MSMEs) from a proposed mandatory tariff on carbon-intensive imports. Two sources familiar with the matter disclosed this stance, underscoring India's ongoing resistance to the carbon tariff, which it also opposed at the World Trade Organisation's ministerial meeting in Abu Dhabi earlier this year, as reported by Mint.

The eighth round of free trade agreement (FTA) discussions is scheduled to take place in Brussels from June 24 to 28, 2024. During these talks, India plans to reiterate its concerns and seek relief for its MSMEs, which it argues would be disproportionately affected by the imposition of the carbon tariff. The proposed exemption is seen as a crucial measure to protect the competitiveness of Indian small businesses on the global stage while they adapt to evolving environmental regulations.

CBAM, a green tariff on carbon-intensive products, is part of the European Green Deal. It will take effect in 2026, following a transitional phase from 2023 to 2025.