The EU’s CBAM framework will impact India’s 15-40% of steel exports to Europe: Icra

The Carbon Border Adjustment Mechanism (CBAM) framework will impact India’s 15-40 percent of steel exports to Europe, Icra said on Thursday.

The effects can be observed in the calendar year 2026 to 2034, according to a report by the rating agency.

The European Union (EU) will introduce the CBAM from October 1 of this year.

Icra said the EU is the second largest steel consuming block in the world. She recently signed the mechanism that sets the framework for levying taxes on embedded carbon imports from six sectors, including steel, aluminium, cement, hydrogen, electricity and fertilizers.

“…CBAM compliance requirements could cut profits of Indian steel exports to EU by 60-165 USD/MT between CY 2026 and CY 2034. CBAM will affect between 15 and 40 percent of India’s annual steel exports to Europe. Failure to reduce carbon footprint may result in lower profits in EU markets,” it said.

According to Icra, India exports up to 3-5 million tons of finished steel to Europe every year. India produced 122 tons of finished steel in FY 2022-23.

The average emissions intensity of leading domestic primary steel producers is 12 percent higher than the global average from the blast furnace route, it said.

Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, said: “Leading domestic primary steel producers have an average carbon emissions intensity of around 2.6 tonnes CO2/tonne of crude steel.

“Europe has always been a key foreign destination for Indian steel mills, accounting for between 15 and 40 percent of our annual steel exports. However, the carbon footprint of Indian factories is significantly higher than that of competing suppliers in the EU.”

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