Vijay Jayaraj, Naveed Ahmed
Like many developing economies, India faces coercion from the United Nations and Europe to conform to climate policies, especially through the imposition of carbon taxes on imports into their countries. But Delhi is not about to bend to such tactics.
“If they [EU and U.K.] put in a carbon tax, we'll retaliate,” said India’s Union Minister Piyush Goya at the Columbia India Energy Dialogue in New York City. “I think it will be very silly, particularly to put a tax on friendly countries like India.”
That isn’t a bluff. It’s a moral, strategic, and scientific imperative grounded in realpolitik and economic logic.
India and the U.K. have inked a trade deal that promises to boost bilateral trade by more than $33 billion and increase U.K. gross domestic product and wages by many billions.
On paper, this deal is a triumph for both nations, removing duties on 99% of Indian goods entering the U.K. For India, this means greater market access for textiles, agriculture and manufactured goods – sectors that employ millions and drive economic growth.
Yet, the U.K.’s pending Carbon Border Adjustment Mechanism (CBAM) remains in place with no exemptions for Indian steel, cement and aluminum, despite the trade agreement.
Starting January 2027, the U.K. is to impose a levy on these “carbon-intensive” imports, supposedly to compensate for the difference between the U.K.’s domestic carbon tax and India’s lower assessment at home. The tax on imports is to prevent “carbon leakage” — the idea that emissions are “outsourced” to countries with fewer regulations.
This hocus-pocus is nothing more than repugnant virtue signaling that penalizes manufacturers in developing countries for using the very fossil fuels that powered the West’s rise in the 19th and 20th centuries.
India’s export of these products to the EU and U.K. are a critical part of its economic engine. In 2022 alone, 27% of India’s iron, steel and aluminum exports went to the EU.
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