How Indian industries are adapting to CBAM and carbon pricing

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illuminem summarises for you the essential news of the day. Read the full piece from EY or enjoy below:

🗞️ Driving the news: Industries in India are adjusting their export strategies and production systems as the Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase in 2026, linking access to the European market to the carbon intensity of products

🔭 The context: The policy, aligned with the European Union Emissions Trading System, places a carbon price on imported goods such as steel, aluminium, cement and fertilizers
• For India, these sectors account for a large share of exports affected by CBAM
• Early signals already show pressure on trade flows, with steel exports to the EU declining during the reporting phase and buyers increasingly demanding verified emissions data

🌍 Why it matters for the planet: CBAM effectively extends carbon pricing beyond Europe, encouraging exporters worldwide to reduce the emissions intensity of industrial production
• If widely replicated, such mechanisms could accelerate global decarbonization of heavy industry, one of the hardest sectors to clean up and a major source of global emissions

⏭️ What’s next: Indian firms are investing in hydrogen-ready steel plants, renewable electricity for aluminium smelting, energy efficiency upgrades and improved emissions monitoring systems
• Meanwhile, India’s domestic Carbon Credit Trading Scheme aims to introduce a national carbon price, allowing companies to internalize carbon costs locally rather than paying them at the EU border

💬 One quote: “Treat CBAM as a structural signal, not a temporary hurdle.” - Saunak Saha

📈 One stat: Steel, aluminium, cement and fertilizers account for most of India’s exports exposed to CBAM carbon pricing rules

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