India’s exports are likely to be hit by EU 20% to 35% tariffs on high-carbon goods like steel, iron ore and cement, the Indian finance ministry said in a report released yesterday.
In April, the EU approved the world’s first plan to impose a levy on high-carbon goods imports starting in 2026. This is so that the EU can become a net zero emitter of greenhouse gases by 2050, 20 years earlier than India’s current target.
From October 1, 2023, onwards, the carbon content of exports to the EU must be documented. This would apply mainly to steel, cement, aluminium, fertilisers, electricity and hydrogen products.
On a positive note, the finance ministry’s annual economic report noted that since energy prices were expected to remain at lower levels for the rest of the year, this should help with the trade deficit.
India’s merchandise trade deficit rose faster-than-expected in May to $22.12 billion, up from $15.24 billion in April, reflecting a drop in demand for Indian exports from developed countries.
The report envisaged sustained economic growth for the future but cautioned about risks related to geopolitical tensions and the effects of the El Nino weather phenomenon on the agricultural sector.
