How does the European Union’s Carbon Border Adjustment Mechanism (CBAM) impact India? What measures can India adopt to mitigate the impact?
Kartavya Desk Staff
Topic: Effect of Policies and Politics of Developed and Developing Countries on India’s interests
Topic: Effect of Policies and Politics of Developed and Developing Countries on India’s interests
Q3. How does the European Union’s Carbon Border Adjustment Mechanism (CBAM) impact India? What measures can India adopt to mitigate the impact? (10M)
- •*Difficulty level: Moderate
- •Reference: The Hindu*
Why the question: The Economic Survey has noted that the forthcoming Carbon Border Adjustment Tax (CBAT) mooted by the European Union “went against the spirit of the Paris Agreement.” Key Demand of the question: To explain the impact of the EU’s Carbon Border Adjustment Mechanism (CBAM) on India’s manufacturing sector and suggest measures for India to mitigate this impact. Directive: Discuss – Provide a detailed examination and analysis of the topic. Structure of the answer: Introduction: Briefly introduce the EU’s Carbon Border Adjustment Mechanism (CBAM) and its purpose. Body: First part: Impact on India’s Manufacturing Sector Explain how CBAM will affect Indian exports, especially in energy-intensive sectors like steel, cement, aluminium, and chemicals. Impacts, including increased costs for exporters and potential loss of competitiveness in the EU market. Second part: Measures to Mitigate Impact Enhancing Domestic Environmental Standards, adopting greener technologies and practices to reduce carbon emissions in manufacturing. Engaging in International Diplomacy: Emphasise the need for collaboration on global climate policies that consider the development needs of countries like India. Diversifying Export Markets: alternative markets to reduce dependency on the EU. Conclusion: Reinforce the importance of proactive measures to mitigate these impacts and maintain competitiveness.
Why the question:
The Economic Survey has noted that the forthcoming Carbon Border Adjustment Tax (CBAT) mooted by the European Union “went against the spirit of the Paris Agreement.”
Key Demand of the question:
To explain the impact of the EU’s Carbon Border Adjustment Mechanism (CBAM) on India’s manufacturing sector and suggest measures for India to mitigate this impact.
Directive:
Discuss – Provide a detailed examination and analysis of the topic.
Structure of the answer:
Introduction:
Briefly introduce the EU’s Carbon Border Adjustment Mechanism (CBAM) and its purpose.
First part: Impact on India’s Manufacturing Sector
Explain how CBAM will affect Indian exports, especially in energy-intensive sectors like steel, cement, aluminium, and chemicals.
Impacts, including increased costs for exporters and potential loss of competitiveness in the EU market.
Second part: Measures to Mitigate Impact
Enhancing Domestic Environmental Standards, adopting greener technologies and practices to reduce carbon emissions in manufacturing.
Engaging in International Diplomacy: Emphasise the need for collaboration on global climate policies that consider the development needs of countries like India.
Diversifying Export Markets: alternative markets to reduce dependency on the EU.
Conclusion:
Reinforce the importance of proactive measures to mitigate these impacts and maintain competitiveness.