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India Signs Trade Pact With UK Excluding CBAM Carve-Out, Vows Retaliation

The agreement leaves Indian exporters at risk of carbon levies under the UK’s 2027 CBAM rules, with fees tied to emissions intensity alongside carbon price differences.

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Piyush Goyal
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Overview

  • The July 24 Comprehensive Economic and Trade Agreement does not include an exemption for the UK’s pending Carbon Border Adjustment Mechanism.
  • Commerce Minister Piyush Goyal said India will take an appropriate response against any UK carbon tax that acts as a non-tariff barrier to exports.
  • The UK plans to apply CBAM from January 2027, charging importers per product’s greenhouse gas intensity and carbon price differences.
  • Trade analysts warn that without a carve-out, Indian steel and aluminium exports will face asymmetric carbon levies even as UK goods enter duty free.
  • India describes the pact as transformational for farmers, youth, MSMEs and industry while safeguarding sensitive items such as agriculture and ethanol.