- The Finance Minister criticized the European Union’s Carbon Border Adjustment Mechanism (CBAM) and Deforestation rules as unilateral and arbitrary, warning that these measures will negatively impact countries like India, hampering economic growth and green energy transition efforts.
- CBAM was described as a trade barrier creating unforeseen risks for India’s efforts towards its net-zero commitments.
| Carbon Border Adjustment Mechanism (CBAM) | European Union Deforestation Regulation (EUDR) |
| CBAM aims to put a fair price on carbon emissions from carbon-intensive goods entering the EU, promoting cleaner industrial production. | EUDR mandates that products exported to the EU must meet guidelines proving that the land used for production has not been subject to deforestation since 31 December 2020. |
| Ensures that the carbon price of imports equals the carbon price of domestic production. | EUDR will be effective from 30 December 2024, targeting commodities such as cattle, cocoa, wood, coffee, oil palm, rubber, and soya, as well as derived products like leather and paper. |
| CBAM aligns with WTO rules and will be applied definitively from 2026, with a transitional phase between 2023-2025. | Exporters must provide geolocation coordinates, adhere to domestic laws, and ensure production is deforestation-free. |
| CBAM is aligned with the EU Emissions Trading System (ETS) phase-out of free allowances. | Geolocation data must be precise, including latitude and longitude to six decimal places for areas over 4 hectares. |
- Failure to comply with EUDR requirements may result in consignments being held, returned, or destroyed at the EU border.
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