New Delhi, May 5 (FN Agency) Decision on ways to deal with the European Union’s move to introduce Carbon Border Adjustment Mechanism (CBAM) is high on the agenda of Department of Commerce, said Santosh Kumar Sarangi, Director General, Directorate General of Foreign Trade (DGFT). Addressing the concerns raised by MSMEs over the impact of CBAM, Sarangi said that India has been exploring various options including ways in which retaliation could also be done or raising the issue at WTO level or extending support to the MSMEs. “Therefore, there are various options which are currently being examined. So, this is one of the top agenda items of Department of Commerce, ” he said during a session organised by engineering exports promotion body EEPC India. Mr Sarangi said that the EU would unlikely defer the introduction of CBAM and the monitoring mechanism would kick in from October this year followed by levying of carbon tax from 2026.
“So, how do we create mechanism which will support MSMEs, our steel industry, our aluminium industry is something on which Department of Commerce, Ministry of Steel and Ministry of MSME all are trying to work together,” he said. He further said that the exact contours of support and exact contours of dealing with the EU have not really been finalized yet and work is still in progress. Under the proposed CBAM, the EU has decided to impose a levy on import of carbon-intensive goods starting 2026. The move is set to hit various sectors especially steel and aluminium. Mr Sarangi lauded the efforts of the exporting community in achieving record exports and assured that as and when the issues related to carbon tax by EU comes to DGFT full support would be provided. Speaking at the session held in Mumbai on Thursday EEPC India Chairman Arun Kumar Garodia said that the new Foreign Trade Policy (FTP 2023) is a crucial step towards achieving India’s ambitious export targets and enhancing the competitiveness of Indian industries.
He noted that policy is focused on boosting exports and reducing trade barriers, providing support to exporters, and promoting ease of doing business. While appreciating the policy action steps in the FTP 2023, he raised some concerns of the exporters and urged the government to address them. “The rebate given by RoDTEP for engineering sector is mostly in the range of 0.5% to 1%, which is significantly lower than the incentives provided under the earlier Merchandise Exports from India Scheme (MEIS), which offered incentives in the range of 2% to 5% of FOB,” he stated. Garodia also pointed out that primary iron and steel sector has been kept out of the scheme’s purview, which has further compounded the challenges faced by the exporters.