What Global Powers' Switch To Protectionism Means For India

What global powers’ switch to protectionism means for India

THE US and EU are major export destinations and India certainly cannot remain immune from the climate-focussed trade measures that these countries have introduced.

Let's consider the impact of Carbon Border Adjustment Mechanism or CBAM introduced by the EU. The tariff, also known as carbon border tax, will impose a carbon price on the "embedded" emissions in goods that enter the EU. Emission-intensive products like aluminium, and iron and steel that India exports to the EU are likely to be subject to a tax under CBAM once it comes into force later this year.

But the extent of the impact is difficult to gauge as India so far does not have a have a single domestic carbon price, which can be used under CBAM to equalise the price of carbon between domestic products and imported commodities. The Rajya Sabha has approved a domestic carbon market last year, but it will be fully operational by 2026. Besides, many companies in the country have already adopted voluntary climate targets. An analysis by the Centre for Science and Environment (CSE), Delhi, shows that the emission reduction targets set by many Indian steel players are even more ambitious than the National Steel Policy 2017. "The National Steel Policy 2017 targets 2.2 to 2.4 tonnes of CO₂ per tonne of steel (from the blast furnace-basic oxygen furnace route), whereas companies like Tata Steel and jsw Group have set targets below 2 tonnes,” says Parth Kumar of cse’s industrial pollution unit. Companies are also geared towards decarbonisation by following strategies such as carbon capture storage and utilisation, scrap-based steel manufacturing and the use of plastics as a fuel, despite the absence of a well-defined policy framework for such technologies and interventions, he says.