A carbon tax on imports in the European Union will lead to a drop in Indian steel exports to the bloc, forcing producers to seek other markets. The Carbon Border Adjustment Mechanism aims to level the playing field for European industrial producers. India exports 66% of its steel to the EU, but this is set to decrease due to emission regulations.

The corporate sector pushed for concessions from the EU to boost competitiveness, resulting in the CBAM. The mechanism will cover various imports, including steel, cement, fertilizers, and electricity. Indian steel producers may need to switch to electric arc furnaces, which have lower emissions but require time and investment.

The CBAM will likely slow down India’s exports to the EU in the short term. The timing of the mechanism’s implementation coincides with Europe’s steel demand for rearmament efforts. Companies are still navigating how to adapt to the new regulations, which may impact their exports to the EU.

Read more at Yahoo Finance: India Braces for a Steel Export Slump as Europe’s Carbon Tariff Takes Hold