Parl Panel for 3-yr deferment on carbon tax for MSMEs
EU’s carbon tax is effective from Jan 1, 2026, on 7 carbon-intensive sectors
New Delhi: India should seek deferment on imposition of carbon tax by the European Union (EU) on engineering sector’s MSMEs by three years as domestic manufacturers may not have the financial resources to counter the duty, according to a Parliamentary Panel’s report.
The report recommended that developing a robust mechanism to support and equip MSMEs to counter the adverse effects of CBAM (carbon border adjustment mechanism) must be implemented on a priority basis. The EU has decided to impose carbon tax - CBAM - from January 1, 2026, on seven carbon-intensive sectors, including steel, cement, and fertiliser. Engineering goods would come under the purview of this import duty.
The department said that to protect the domestic industry from the imposition of additional tariffs by the US and non-tariff barriers in the form of CBAM, the government should engage at the highest level with the US and EU to resolve the matter.
