India and the European Union (EU) have agreed to work together to address challenges arising from the implementation of the Carbon Border Adjustment Mechanism (CBAM), particularly for small and medium enterprises (SMEs). The consensus was reached during the recently held second India-EU Trade and Technology Council (TTC) meeting.
Addressing Concerns on CBAM
Both sides acknowledged the difficulties SMEs face under CBAM and pledged to continue working towards solutions. According to a joint statement released after the meeting, India and the EU discussed the impact of CBAM and agreed to collaborate on mitigating its effects on SMEs.
Tanmaya Lal, Secretary (West) in the Ministry of External Affairs, emphasized India’s ongoing concerns about CBAM. He noted that India had repeatedly raised these issues and acknowledged the EU’s recent modifications to simplify the framework.
“We are examining the implications of these changes, and we hope that the concerns of developing countries are adequately addressed,” he said.
Understanding CBAM’s Impact
CBAM is a tool designed by the EU to place a ‘fair price’ on carbon emissions generated while producing imported goods. The mechanism will impose taxes on imports that exceed a specified carbon emission threshold. Affected products include cement, iron and steel, aluminium, fertilizers, electricity, and hydrogen.
Experts warn that CBAM could undermine the benefits India might expect from a Free Trade Agreement with the EU. India is particularly advocating for exemptions for SMEs within the CBAM framework to protect its domestic industries.
Advancing Cooperation in Strategic Technologies
Apart from the ministerial discussions, the TTC’s three working groups also met to advance collaboration in key technological areas. The Strategic Technologies, Digital Governance, and Digital Connectivity working group focused on research and development in chip design, heterogeneous integration, sustainable semiconductor technologies, and process design kits for advanced manufacturing.
Both sides agreed to strengthen semiconductor supply chains by investing in secure, sustainable, and diversified production capabilities.
Additionally, during European Commission President Ursula von der Leyen’s visit, India and the EU signed a memorandum of understanding between the Bharat 6G Alliance and the EU 6G Smart Networks and Services Industry Association. This agreement aims to align research priorities and ensure secure, resilient telecommunications supply chains.
Cooperation in Clean and Green Technologies
The Clean and Green Technologies working group explored joint research initiatives in key sustainability areas. India and the EU agreed to collaborate on battery recycling for electric vehicles, tackling marine plastic pollution, and waste-to-hydrogen initiatives.
A joint research fund of €60 million will support these projects, with equal contributions from both sides. The two parties also decided to explore cooperation on harmonizing standards for electric vehicle charging infrastructure, which is critical for global sustainability goals.
Strengthening Trade, Investment, and Value Chains
The Trade, Investment, and Resilient Value Chains working group reviewed progress in key sectors. These included Agri-food, Active Pharmaceutical Ingredients (API), and Clean Technologies. The group expressed satisfaction with advancements in these areas and reaffirmed commitments to enhancing transparency and security in API supply chains.
As reported by knnindia.co.in, India and the EU will work together to prevent disruptions. Their collaboration will focus on mapping vulnerabilities, promoting sustainable pharmaceutical manufacturing, and establishing early warning systems.
