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Tuesday, July 16, 2024

Indian Commerce Minister Assures Resolution on EU Carbon Tax Concerns

Commerce and Industry Minister Piyush Goyal said on Friday that India will address the problem of the European Union’s proposal to put a carbon tax on some imported goods, adding that “I will retaliate” if necessary.

The Carbon Border Adjustment Mechanism (CBAM) or carbon tax (a type of import charge) will take effect on January 1, 2026. However, from October 1st, domestic enterprises in seven carbon-intensive industries, including steel, cement, fertilizer, aluminum, and hydrocarbon products, will be required to submit statistics on carbon emissions with the EU.

“Bharat will address the problem of CBAM with confidence, and we will find solutions. We will see how we can convert CBAM to our advantage if it comes in. Of course, I will retaliate. You need not worry about it,” Goyal said here at an industry chamber event.

According to a report of the think tank Global Trade Research Initiative (GTRI), CBAM will translate into a 20-35 per cent tax on select imports into the EU, starting January 1, 2026.

India exports iron, steel, aluminum, and pelletized iron ore to the EU at an average rate of 26.6%. CBAM would affect these goods. In 2023, India exported these items worth USD 7.4 billion to the EU.

He also stated that India reacted against the US after it imposed higher customs tariffs on some steel and aluminum items.

To settle the difficulties, India and the United States terminated all bilateral trade disputes at the World Trade Organization (WTO).

The minister also requested the sector to support the country’s electric car mission in order to foster long-term growth.

There is a need to quickly replace the existing public buses and trucks in the country with electric vehicles, besides two and four-wheeler vehicles in a mission mode, he added.

“We have not even started the progress on replacement of old vehicles…Can we have more vehicles scrapping across the country? Can each one of you start demanding that in your company, all vehicles will be electric, all trucks coming into your companies will be electric,” he said.

According to the minister, adopting electric vehicles offers economic benefits.

Goyal cited Mumbai’s Brihanmumbai Electric Supply and Transport (BEST) as an example of a constantly losing entity that is now transitioning to EV buses.

“Now, in a year or 1.5 years, there will be 100 per cent electric buses and …(I have been told that) as soon as all the buses go electric, they would end losses and covert it (BEST) into a profit-making body,” he  said.

He urged that every state transportation agency turn a profit by embracing electric mobility.

He stated that the country’s foreign exchange reserves are sufficient for the next 5-6 years “if we continue to have the current levels of current account deficit or trade deficit,” with no threat to the Indian economy.

As of December 1, India’s foreign reserves amounted at USD 604 billion.

He also stated that nations such as Chile and Peru are considering trade treaties with India.

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