Lok Sabha Question No. 18 (UNSTARRED), answered on 2025-02-03
Subject: Impact of India Opposing EU's CBAM
Ministry: FINANCE
Asked by: Thiru Dayanidhi Maran

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA

## UNSTARRED QUESTION NO 18 TO BE ANSWERED ON 3 RD  February 2025

## IMPACT OF INDIA OPPOSING EU'S CBAM

## 18.  Thiru Dayanidhi Maran

Will the Minister of FINANCE

be pleased to state:

- (a) whether there has been any inter-ministerial discussion or consultation on the potential trade impact of India opposing EU's Carbon Border Adjustment Mechanism (CBAM), given its goal of curbing global carbon emissions and if so, the details thereof;
- (b)  whether  the  Government  has  any  alternative  financial  measures  or  incentives  to demonstrate its commitment to reduce carbon emissions and if so, the details thereof;
- (c)  the  measures  taken  by  the  Government  to  insulate  global  shocks  in  carbon-intensive industries/sectors like steel, cement and fertiliser in the country by forcing transition to lowcarbon production methods; and
- (d) the manner  in which the Government  is balancing trade competitiveness and environmental sustainability in response to CBAM?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) The Department of Commerce (DoC), the nodal department for trade negotiations, has conducted consultations to discuss ways to respond to CBAM.
- (b) The Government is committed to following a low-carbon development pathway and has adopted ambitious Nationally Determined Contribution in 2015, which was further updated in 2022.  Comprehensive  action  is  being  taken  through  the  National Action  Plan  for  Climate Change, which includes national missions to expand solar energy production and enhance energy efficiency.  Several financial measures and incentives are being implemented including production-linked  incentives  schemes  on  high-efficiency  solar  PV  modules,  advanced chemistry  cell  battery  storage,  and  automobiles  and  the  auto-component  industry;  and support for the adoption of electric vehicles through the Faster Adoption and Manufacturing of Electric Vehicles scheme initiated in 2019 and the recently introduced PM e Drive scheme. Other initiatives include the National Green Hydrogen Mission for facilitating green hydrogen production and usage. The emission intensity of GDP reduced by 36 per cent in 2020 as compared to 2005 and the share of non-fossil fuel in the installed electricity capacity is 46.8 per cent as of 30 November 2024.

(c) The Government has been implementing the Perform, Achieve and Trade Scheme, which is a regulatory instrument to reduce energy consumption in energy-intensive industries, with  an  associated  market-based  mechanism  to  enhance  cost-effectiveness  through certification  of  excess  energy  savings  which  can  be  traded.  Other  measures  include  the release  of  the  taxonomy  for  green  steel,  which  provides  standards  for  defining  and categorising low-emission steel and a roadmap and action plan for greening the steel sector. Steel  Scrap  Recycling  Policy,  2019  envisages  enhancing  the  availability  of  domestically generated  scrap  to  reduce  coal  consumption  in  steel  making. The  fertiliser  industry  has undertaken measures to improve energy efficiency and use of cleaner feedstock like natural gas from coal, naphtha and fuel oil.

(d) Measures to reduce the emission intensity of GDP, enhance the share of non-fossil fuel  in  the  installed  electricity  generation  capacity,  and  facilitate  the  shift  to  low  carbon development pathway in carbon-intensive industries/sectors address environmental sustainability.  In  addition,  many  strategic  initiatives  have  been  taken  to  boost  export competitiveness through production-linked incentive schemes that offer financial incentives to manufacturers across sectors, expand the global trade footprint by negotiating Free Trade Agreements, improve infrastructure facilities, streamline supply chains and reduce logistics costs, using digital platforms for simplification of regulatory processes to reduce transaction costs.    Together,  these  efforts  are  aligned  with  the  broader  objectives  of  achieving environmental sustainability and improving trade competitiveness.

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