India is working to establish a clearer pathway for its domestic carbon-pricing system to be considered under the European Union’s Carbon Border Adjustment Mechanism (CBAM). The discussions involve emissions monitoring and verification, along with how carbon costs are treated on traded goods.
On 12 October 2026, India’s Power Secretary Pankaj Agarwal met Gerassimos Thomas, the European Commission’s director-general for taxation and customs, in New Delhi. The meeting covered India’s developing carbon market, EU CBAM implementation, and monitoring, reporting and verification (MRV) systems.
The talks also addressed the potential recognition of India’s domestic carbon-pricing mechanisms. No formal agreement recognising India’s carbon-pricing system under EU CBAM was reported from the meeting.
Carbon market details discussed with the European Commission
India reported that its Carbon Credit Trading Scheme (CCTS) includes emissions-intensity reduction targets covering 490 industrial units. The country also highlighted 308 GW of non-fossil power capacity within total installed electricity generation capacity of 558 GW.
The technical dialogue was described as a channel for examining how India’s developing carbon market and emissions-monitoring infrastructure could align with EU CBAM requirements. For exporters, the commercial relevance depends on whether domestic carbon-pricing arrangements can be supported by evidence acceptable under the European framework.
A national carbon market alone was not presented as sufficient for CBAM relief eligibility. Exporters are expected to show that a qualifying carbon price was effectively paid on emissions embedded in goods entering the EU.
Evidence requirements for carbon-cost deductions
Recognition of domestic carbon costs depends on evidence covering the payment made and the emissions to which it applies. It also involves how free allocation is treated and whether any rebates or other compensation apply.
The link between the carbon price and the specific exported product was also identified as relevant. These requirements place emissions data and verification arrangements at the centre of any potential relief mechanism.
Indian producers would need to connect domestic carbon costs to installation-level emissions and to the products supplied to European customers. For EU importers, outcomes could influence supplier comparisons based on whether documented domestic carbon payments qualify after CBAM adjustments.
Implications for steel, aluminium and downstream coverage
India’s carbon-pricing discussions were described as particularly relevant to steel and aluminium. These sectors are identified as major areas of Indian exports to international markets.
The potential expansion of EU CBAM to additional downstream products from 2028 was raised, contingent on adoption of relevant legislation. If implemented, this could widen the range of Indian manufactured goods exposed to the mechanism.
For producers supplying these markets, interactions between domestic carbon pricing, emissions verification and EU import requirements could affect export costs. Any benefit would depend on final regulatory treatment and the ability to substantiate eligible payments against emissions associated with exported goods.
Regional comparison through UK CBAM framework
The discussion included a regional reference point via Serbia and Montenegro in relation to the United Kingdom’s CBAM framework. The UK lists both jurisdictions as having carbon-pricing systems that may qualify for relief, subject to evidence and eligibility requirements.
The UK arrangements were noted as not determining how the EU will treat India’s carbon-pricing system. The two jurisdictions operate under separate legal frameworks, so recognition under one does not create entitlement under the other.
For Indian exporters, the central issue remains whether India’s Carbon Credit Trading Scheme (CCTS), MRV arrangements and verification infrastructure can provide sufficiently precise evidence of effective carbon cost per tonne of steel or aluminium entering the European market.