EU-India Collaborate on Carbon Border Adjustment Mechanism – Defence News

In a significant move towards enhanced environmental cooperation, the European Commission’s Director-General Gerassimos Thomas led a mission of the Directorate-General for Taxation and Customs Union (DG TAXUD) officials to New Delhi. The focus of the two-day visit July 1-2 was the EU’s Carbon Border Adjustment Mechanism (CBAM) and its implications for both the EU and Indian industries.

Emphasizing Environmental Goals

During his visit, Thomas engaged with key Indian governmental counterparts and industry stakeholders. He explained that CBAM is designed to prevent carbon leakage by ensuring that imported goods are subject to the same carbon costs as those produced within the EU. This mechanism aims to encourage industries worldwide to reduce their carbon emissions, thus contributing to global decarbonization efforts. Thomas praised India’s plans to decarbonize its economy, highlighting the shared commitment between the EU and India to collaborate on environmental issues.

“My mission was an excellent opportunity to have direct, in-depth, and meaningful interactions with my Indian counterparts and business representatives on a wide range of tax and customs matters, as well as CBAM,” Thomas stated. He stressed the importance of EU-India relations and the mutual desire to deepen this partnership for the benefit of both economies.

Addressing Challenges and Opportunities

The visit provided a platform for listening to the challenges faced by Indian businesses in implementing CBAM. Thomas and his team sought to understand how Indian Micro, Small, and Medium-sized Enterprises (MSMEs) might be affected, despite the CBAM measure primarily targeting larger enterprises. This dialogue aimed to ensure that the CBAM’s implementation is smooth and beneficial for all parties involved.

Technical meetings with the Ministry of Power and the Bureau of Energy Efficiency (BEE) were scheduled to continue, with an assessment report on the transition period set to be submitted to the European Council and Parliament by the end of next year. This report will be public, offering Indian industries and authorities the opportunity to provide feedback and engage in further discussions with the European Commission.

Beyond CBAM, the visit underscored mutual interests in carbon trading markets, pricing mechanisms, and cooperation in energy efficiency, renewables, and clean technology.

Taxation and Customs Cooperation

In addition to environmental discussions, taxation was a significant topic during Thomas’s visit. He discussed the Two-Pillar Solution to address the tax challenges of digitalization with Indian government counterparts. India reaffirmed its commitment to Pillar 2, and both parties agreed on the importance of avoiding overlaps in international tax cooperation frameworks.

The longstanding EU-India Customs Cooperation Agreement (CCMAA) since 2004 was also a focus. Thomas addressed modern challenges such as cross-border e-commerce and designer drug precursors. India agreed to strengthen bilateral ties and enhance cooperation on these issues under the existing CCMAA framework. The ongoing negotiations for an EU-India Free Trade Agreement (FTA) aim to include upgrades to customs cooperation.

Strengthening Partnerships

Thomas held multiple meetings with Indian ministries, including Finance, Power, Steel, Commerce and Industry, Environment, Forest and Climate Change, and New and Renewable Energy. These discussions aimed to provide updates and reinforce the collaborative efforts between the two regions.

Key industry leaders from the EU and India also participated in several stakeholder engagements organized by the EU Delegation in cooperation with the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI). These meetings offered valuable insights into the operational challenges and opportunities presented by CBAM and other related issues.