Explained: This article explains the political background, key decisions, and possible outcomes related to Explained : Failure to secure CBAM exemption weakens India-EU FTA, Congress claims and Its Impact and why it matters right now.
“The Modi government’s failure to secure an exemption for India’s aluminium and steel-makers from the Carbon Border Adjustment Mechanism (CBAM) is one of @INCIndia’s key concerns regarding the FTA,” said Congress communication in-charge Jairam Ramesh. “India’s aluminium and steel exports to EU have already fallen from $7 billion to $5 billion and are only expected to fall further beginning this year due to the enforcement of CBAM since January 1, 2026. Over time, CBAM will also expand to include other categories of India’s industrial exports and can effectively nullify any gains India secures from FTA.”
Another concern, he said, was about EU’s strict health and product safety rules, which would continue to be applicable to Indian exports even after FTA. “This can easily become a non-tariff trade barrier, and EU has been accused of the same by other trade partners. Questions over Intellectual Property rights for our pharmaceutical sector are also unanswered,” he said.
Congress expressed concerns about inclusion of automobiles in FTA – wondering whether it would adversely affect domestic automobile manufacturers – and about India’s largest export to EU, refined fuels, a large portion of which is sourced from Russia. “There needs to be clarity on the future of these…amid pressure from Washington DC,” he said. FTA’s impact on India’s trade deficit will also have to be monitored closely, according to Congress.