Question 1

What is CBAM and when does it start?

Accepted Answer

The EU Carbon Border Adjustment Mechanism (CBAM) is a carbon tariff on imports of carbon-intensive goods into the EU. The transitional period ran from Oct 2023 to Dec 2025 (reporting only). The definitive period with financial obligations started 1 Jan 2026. Full phase-in completes by 2034.

Question 2

Which Indian products are affected by CBAM?

Accepted Answer

CBAM covers 6 product categories: cement (CN 2523), iron and steel (CN 72/73), aluminium (CN 76), fertilisers (CN 28/31), electricity (CN 2716), and hydrogen (CN 2804). India is heavily exposed in steel, aluminium, and cement exports to the EU.

Question 3

How is CBAM duty calculated?

Accepted Answer

CBAM duty = Embedded emissions (tCO2e per tonne) x EU ETS carbon price (EUR/tCO2) x CBAM coverage percentage (rising from 2.5% in 2026 to 100% in 2034) minus any carbon price already paid in the origin country. Free allocation given to EU producers is phased out simultaneously.

Question 4

How much will CBAM cost Indian steel exporters?

Accepted Answer

At full phase-in (2034), Indian hot-rolled steel exports face approximately EUR 130,200 per 1,000 tonnes at current EU ETS prices (EUR 62/tCO2). In 2026 (2.5% coverage), the cost is approximately EUR 3,250 per 1,000 tonnes.

Question 5

Does India have a carbon price that can offset CBAM?

Accepted Answer

India does not yet have a carbon pricing mechanism that qualifies for CBAM carbon price credit deduction under EU Regulation 2023/956 Article 9. The Indian Carbon Credit Trading Scheme (CCTS) compliance market rules were notified by BEE in June 2025, and the voluntary market is operational, but CCTS credits are not currently recognized for CBAM deduction purposes.

Question 6

What is a CBAM declaration and when is it due?

Accepted Answer

From 2026, authorised CBAM declarants must submit an annual CBAM declaration by 31 May each year, covering imports from the previous calendar year. The first annual declaration covering 2026 imports is due by 31 May 2027. Declarants must purchase and surrender CBAM certificates corresponding to the embedded emissions of imported goods.

Question 7

What changed with the EU Omnibus Regulation 2025/2083 for CBAM?

Accepted Answer

The EU Omnibus Simplification Regulation (EU) 2025/2083 adopted on 26 February 2025 introduced significant CBAM modifications: simplified reporting for small importers importing less than 150 tonnes CO2e per year, extended use of EU default emission values beyond the original 2028 deadline, and adjusted authorised declarant registration thresholds. These changes reduce the compliance burden for smaller exporters.

Question 8

What is the difference between actual and default emission values for CBAM?

Accepted Answer

CBAM allows two approaches for determining embedded emissions: actual facility-level data (measured at the installation producing the goods) or EU default values published in Implementing Regulation (EU) 2023/1773 Annex III. Default values are typically higher than actual values, so exporters with cleaner production benefit from reporting actual data. The Omnibus Regulation 2025/2083 extended the deadline for mandatory use of actual values.

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